Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS > GREATER LONDON COUNCIL (MONEY) BILL

Bill to be read the Third time tomorrow.

GREAT SOUTHERN CEMETERY AND CREMATORIUM COMPANY BILL [Lords]

Bill read the Third time and passed, without Amendment.

BRITISH RAILWAYS (No. 2) BILL

[Queen's Consent, on behalf of the Crown, signified]

LONDON TRANSPORT (No. 2) BILL

[Queen's Consent, on behalf of the Crown, signified]

Bills read the Third time and passed.

OLDHAM CORPORATION BILL [Lords]

Bill read the Third time and passed, with Amendments.

OXFORDSHIRE COUNTY COUNCIL (No. 2) BILL

Bill read the Third time and passed.

SOUTHAMPTON CORPORATION (SOUTHAMPTON COMMON) BILL [Lords]

Bill read the Third time and passed, with Amendments.

TORBAY CORPORATION (No. 2) BILL

Bill read the Third time and passed.

TRENT RIVER AUTHORITY (GENERAL POWERS) BILL

As amended, considered; to be read the Third time.

LUTON CORPORATION BILL [Lords]

MERSEY DOCKS AND HARBOUR BOARD (ORE BERTH) BILL [Lords]

Bills read a Second time and committed.

BRISTOL CORPORATION (WEST DOCK) BILL [Lords] (By Order)

To be read a Second time upon Thursday next.

Oral Answers to Questions — NATIONAL FINANCE

Voluntary Incomes Policy

Mr. Douglas: asked the Chancellor of the Exchequer if, at the next meeting of the National Economic Development Council at which he takes the chair, he will submit a paper dealing with a voluntary incomes policy.

The Chancellor of the Exchequer (Mr. Anthony Barber): Arrangements have been made for the Council to have a general discussion of economic affairs at its meeting on 7th July. I expect the discussions to cover a wide range of economic topics including prices and incomes. The T.U.C. has offered to prepare a paper for discussion at the meeting.

Mr. Douglas: Would the Chancellor accept that there is a growing feeling in the country that the Government are callously attempting to get an incomes policy on the backs of the unemployed and that this is particularly so after the tragic events at Upper Clyde Shipbuilders? Is he aware that if the Government continue with this foolhardy policy there will be little hope of their receiving co-operation from the trade unions?

Mr. Barber: I do not propose to anticipate the discussions which we shall


be having on 7th July. To do so would only prejudice those discussions.

Mr. Bruce-Gardyne: Would my right hon. Friend not agree that it would be pointless to discuss the voluntary incomes policy without some discussion of the attitude so recently expressed by such trade union leaders as Mr. Jones and Mr. Scanlon towards any such policy?

Mr. Barber: Again I can only say that I do not want to prejudice the outcome of these discussions. I have made it clear in the House before that I have never ruled out a voluntary incomes policy. I repeat that it would have to be a real and genuine policy, not a make-believe one.

Mr. Barnett: How does the right hon. Gentleman make sense of his present incomes policy, bearing in mind his willingness to give 11½ per cent. to his own Civil Service employees and his wish to give considerably less elsewhere?

Mr. Barber: Because the circumstances in respect of each claim are different.

Investment Prospects

Mr. William Hamilton: asked the Chancellor of the Exchequer if he will make a statement on the prospects for investment for the remainder of the current financial year.

The Minister of State, Treasury (Mr. Terence Higgins): The hon. Member will be aware of the forecasts for investment up to the first half of 1972 in the Financial Statement and Budget Report for 1971–72. It would be wrong to revise the Budget forecast month by month on the basis of partial indicators.

Mr. Hamilton: In view of the latest figures, which show a deterioration in the situation, when do the Government intend to introduce measures to induce growth in the economy? Is the hon. Gentleman aware that an increasing number of people regard the Government as an unmitigated disaster in the last 12 months?

Mrs. Fenner: What about the last six years?

Mr. Hamilton: There were 13 years before the six. When do the Government

intend to take steps to remedy this disastrous situation?

Mr. Higgins: I do not accept that the present situation is disastrous. The investment position in the last quarter has certainly been disappointing. We are most certainly not complacent about it. This was clearly reflected in my right hon. Friend's Budget Statement, which provided for an expansion of output in line with productive potential. That is our intention, and we believe that the Budget contained a number of proposals for encouraging investment which will take effect.

Mr. Taverne: Do not all the signs show that the outlook is more pessimistic after the Budget than it was before the Budget, and does not this call for a revision of the Budget judgment, which is now shown to be wrong?

Mr. Higgins: I most certainly do not believe that is so. The Budget had a considerable effect on general expectations. The important point, which I am sure will be accepted on both sides of the House, is that these measures will take I time to become effective. Some have not yet become operative, but as they do, we shall find a general improvement in our economic life.

Overseas Investments

Mr. Moate: asked the Chancellor of the Exchequer what are the latest figures for the United Kingdom overseas investments, and what proportions are invested in the United States of America, Commonwealth countries and the European Economic Community, respectively.

The Chief Secretary to the Treasury (Mr. Maurice Macmillan): United Kingdom private overseas investments at the end of 1970 are estimated at £14,400 million (about half direct and half oil and portfolio). The proportions invested in the areas mentioned are approximately 20, 40, and 10 per cent. respectively.

Mr. Moate: I thank my hon. Friend for his helpful reply, but does he not agree that the figures of company direct investment show that two-thirds of the direct investments are in the Commonwealth and sterling area countries, and that in Australia alone companies have


more funds invested than in all the Common Market countries? Does he not agree that this is an indication of the present and future strength of the Commonwealth and sterling area territories?

Mr. Macmillan: I am happy to agree with my hon. Friend that investment in, for example, Australia is rising, but investment from the United Kingdom in Australia is not rising as fast as investment either from the United States and Canada or from the rest of the world. United Kingdom investment for the period from 1947–48 to 1951–52 was 68 per cent. of the total, and it has now dropped to 40 per cent. Investment in that period from the rest of the world was 8 per cent. and has now risen to 17 per cent. Equally, the last few years have shown a great increase in the proportionate investment of the United Kingdom in the E.E.C. countries compared with the Commonwealth countries.

Mr. Cant: Bearing in mind the tendency of the United States to buy up the industry of Western Europe with dollars borrowed from the Eurodollar market financed by its own balance of payments deficit, what is the hon. Gentleman prepared to do as a quid pro quo to persuade the United States authorities to permit companies in the United States to issue dividend gross equities to non-United States resident companies so that we can buy up American industry?

Mr. Macmillan: That is an extremely interesting question, but I do not think it arises out of this one.

£ Sterling (Purchasing Power)

Mr. Kaufman: asked the Chancellor of the Exchequer what is the purchasing power of the £ sterling now, taking it as 100p on 18th June, 1970.

Mr. Higgins: Taking the value of the £ to be 100p in mid-June, 1970, its purchasing power in mid-April, 1971, the latest date for which information is available, is estimated to be 92p. This comparison is based on the movement in the General Index of Retail Prices.

Mr. Kaufman: Is the Minister aware that he gives the House this melancholy information on the day before the anniversary

of the Prime Minister's dishonoured "at a stroke" pledge? Is he further aware that if the Conservative Government go on devaluing the currency at this rate, and if this Parliament lasts its full term of five years, the country will be saddled with "Ted Heath's ten-bob £"?

Mr. Higgins: That is a situation which we are absolutely determined to prevent. We are absolutely determined that we shall control inflation. The measures that we are taking are designed to do that, and we believe that they will achieve their objective.

Mr. Lipton: Would it not help to boost the economy and increase turnover if the Government were to instruct the Bank of England forthwith to sell £ notes for 92p?

Mr. Higgins: The important thing is that we should mobilise public opinion against inflationary wage claims, and I hope that we have the support of the the hon. Gentleman in that objective.

Mr. Redmond: Will my hon. Friend tell the House what was the fall in purchasing power of the £ during the first 12 months after the Socialist Government left office in 1951? Is history not repeating itself?

Mr. Higgins: I certainly do not feel that the record of inflation of the previous Government was one to be proud of.

Growth Rate

Mr. Marten: asked the Chancellor of the Exchequer what is his latest estimate of Great Britain's growth rate for 1972.

Mr. Barber: The estimate contained in the Financial Statement and Budget Report was for an increase in gross domestic product of about 3 per cent. between the first halves of 1971 and 1972. Estimates for the second half of 1972 are not available.

Mr. Marten: On the assumption that the Government hope that it will rise even further, and bearing in mind that the tendency has been for the growth rate of the E.E.C. to flatten out and go down, will my right hon. Friend give


an assessment of the effect of the flattening out or decline in the E.E.C. growth rate on our own growth rate?

Mr. Barber: If my hon. Friend will put down a Question asking for these specific figures, I shall be happy to supply them. If one looks at the figures for the annual trend rate of growth of G.N.P. between 1959 and 1969 of the E.E.C, the average was 5·3 per cent., which is much better than we did in this country.

Mr. Roy Jenkins: Without wishing to follow the hon. Member for Banbury (Mr. Marten) on this point—[HON. MEMBERS: "Why not?"]—I do not agree with him—is it not clear that the British growth rate, for which the Chancellor has direct responsibility, shows that the forecast of the position on which he based his Budget was over-optimistic and that its objectives are not being achieved? Does he endorse the view of his hon. Friend the Minister of State that there is no question of the Budget judgment being wrong, and will he, therefore, stick to it for some time to come?

Mr. Barber: The estimate which was given in the Financial Statement and Budget Report, to which I referred in my answer to the main Question, was an estimate of the growth rate of G.D.P. between the first half of 1971 and the first half of 1972. Our estimate is still the same as the one in the Financial Statement and Budget Report. This, as the right hon. Gentleman will know, is the growth rate that was forecast by the National Institute.

Mr. Roy Jenkins: The right hon. Gentleman has not answered the second and more important part of my question, which is: does he still regard the Budget judgment as right for the remainder of this financial year?

Mr. Barber: If and when I consider it necessary to take any further action I shall take it, and I shall not anticipate any such action at any time during the course of the year. This Question was put down as a specific one by my hon. Friend, and I have answered it. I have told the right hon. Gentleman that I stand by the forecast of the increase in G.D.P. which was made in the Financial Statement and Budget Report.

Mr. Lane: Arising out of the first supplementary question, is it not the

overwhelming view of economists and industrialists that, given fair terms of entry into the Common Market, our growth rate during the 1970s is likely to be much faster if we are able to take advantage of the enlarged market than if we are left outside an increasingly prosperous and influential area?

Mr. Barber: That is certainly a view to which I subscribe.

Mr. Sheldon: Since the National Institute's forecast for 1971 shows a reduction in the G.D.P. this year compared with last year, and since even the Financial Times is calling for the use of the regulator, is the right hon. Gentleman considering using the regulator?

Mr. Barber: There was a fall in domestic output in the first quarter from the level of the second half of last year, but this was expected, and I mentioned this.

Hydrocarbon Oils

Mr. Trew: asked the Chancellor of the Exchequer (1) what estimate he has made of the amount of the excise duty on hydrocarbon oils which is borne ultimately by the paper and board industry;

(2) what estimate he has made of the amount of the excise duty on hydrocarbon oils which is borne ultimately by the horticultural industry.

Mr. Higgins: The total amount of duty paid in 1970 on hydrocarbon oil purchased by the paper and board industry was probably of the order of £3½ million. The duty on most fuel oil used by the horticultural industry is repaid; I regret that no information is available about the duty paid on road fuel by this industry.

Mr. Trew: I am grateful for that information. While I appreciate that both these industries enjoy the benefit of a generous rebate on heavy oils, will my hon. Friend have regard to their plight and the fact that their foreign competitors enjoy the benefit of lower fuel costs, and consider rebating in full the duty on these oils?

Mr. Higgins: No, I cannot undertake to do that. There is a clear distinction between the two industries. The horticultural industry was regarded as an


exceptional case when relief was first granted in 1971. Broader questions on relative fuel costs are a matter for my right hon. Friend.

Mr. Rost: asked the Chancellor of the Exchequer what is the estimated cost in the current financial year to the road haulage industry of the excise duty on hydrocarbon oils.

Mr. Maurice Macmillan: The total amount of duty paid on hydrocarbon oil purchased by road hauliers who transport other people's goods will probably be of the order of £75 million in the current financial year.

Mr. Rost: Does my right hon. Friend not think that this would be an appropriate time to reduce this crippling burden of taxation on fuel oil and petrol? Would this not make a major contribution to controlling the cost of living and inflation which was stoked up by the previous Government?

Mr. Macmillan: My right hon. Friend in his Budget decided that the concessions on indirect taxation should be concentrated on S.E.T. I do not think he can contemplate making any changes at this stage by reducing the taxation on hydrocarbon oils.

Mr. Dalyell: Does the Treasury accept that it is right to use fiscal means to encourage the use of those hydrocarbon oils which are non-polluting?

Mr. Macmillan: That is another question, and if the hon. Gentleman puts it down we will answer it.

Income Tax

Mr. Meacher: asked the Chancellor of the Exchequer how many low-paid workers will be taken out of the income tax bracket as a result of the Budget; and how many he estimates will enter it in the current financial year as a result of upward wage movements.

Mr. Maurice Macmillan: It is estimated that there will be about ¾ million more taxpayers in 1971–72 than in 1970–71 and that this figure would have been about 200,000 greater without the Budget changes. It is not possible to say how much the increase is attributable to rising wages.

Mr. Meacher: In the light of those figures, will the Minister acknowledge that the Government's policy of refusing to raise the tax threshold across the board in the recent Budget and of de-escalating low wages in the public sector is the main cause of poverty among low-paid workers?

Mr. Macmillan: The level of the tax threshold was raised to unprecedented heights by the action of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). I accept that there is much more for us to do. We have embarked on tax reform and simplification.

Economic Growth

Mr. Sillars: asked the Chancellor of the Exchequer what recent representations he has received from the Trades Union Congress about further stimulating economic growth; and what replies he has sent.

Mr. Higgins: The answer to the first part of the Question is none; the second part therefore does not arise.

Mr. Sillars: Is the Minister aware of the T.U.C contention that unless steps are taken further to stimulate economic growth beyond the level calculated in the Budget judgment, unemployment in the coming winter will be even higher than the present disastrous figure?

Mr. Higgins: I do not propose to put forward a specific forecast of unemployment. This has never been done. On the general strategy, which we have already discussed during Question Time today, I believe that we are striking the right balance and that a further programme of expansion, which has been debated on the Floor of the House and in Committee on various Amendments, would not be justified at this stage.

Mr. James Hamilton: Does not the hon. Gentleman agree that we are now in this hopeless situation because the Government have not accepted the advice of the T.U.C? Will he further agree that if we do not take measures now, we shall most certainly have 1 million unemployed?

Mr. Higgins: I do not accept the second point, which is something the hon. Gentleman must take responsibility for. My right hon. Friend a few moments ago expressed his views on this very clearly.

Terms of Trade

Mr. Madel: asked the Chancellor of the Exchequer whether the United Kingdom's terms of trade will, in his latest estimation, show a net favourable movement or a net adverse change in 1971.

Mr. Maurice Macmillan: I see no reason to alter the view expressed on page 11 of the Budget Report, that there should be some further improvement in the terms of trade in 1971.

Mr. Madel: Does the Minister feel that further reflation is now necessary to get an even bigger improvement?

Mr. Macmillan: That point has been amply covered by what my right hon. Friend has said this afternoon, with which, of course, I entirely agree.

Mr. Taverne: Will the Chief Secretary say whether or not he welcomes this development?

Mr. Macmillan: There are certain obvious advantages in the improvement of the terms of trade. Reaching behind what I think the right hon. Gentleman is getting at, any improvement in the terms of trade is a result of continuing cost inflation.

Cost Inflation

Mr. Dixon: asked the Chancellor of the Exchequer what recent trend in cost inflation is indicated by increases notified to him in manufacturers' costs during the past four weeks.

Mr. Barber: I regret that this recent information is not available, but it is clear that in recent months the main factor driving up manufacturers' costs has been the excessive increases in wages.

Mr. Dixon: Since earlier this year average earnings were about 13 per cent. or 14 per cent. higher than they were 12 months before, and now they appear to be 10 per cent. or 11 per cent. higher than they were 12 months before, does not this demonstrate that my right hon. Friend's policy of de-escalation is beginning to work quite well?

Mr. Barber: I believe that the policy is working well. The figures quoted by my hon. Friend are, from my recollection, about right. As I have pointed out in the

past, it is dangerous to read too much into figures for particular months, and special factors have been operating, such as lower overtime.

Mr. Marquand: Does the right hon. Gentleman agree that the figures in his Financial Statement show that if de-escalation worked it would mean that consumer expenditure would rise at a slower rate than forecast, that this would mean that the rate of growth of the economy would be even slower than was forecast, and that this in turn would mean that unemployment would rise even more rapidly than it has already risen?

Mr. Barber: Presumably, the implication of what the hon. Gentleman is saying is that he believes it would be unfortunate if the rate of increase in earnings were slowed down. Whatever views people may have about our policies, I have met nobody yet who takes that particular view.

Public Authorities (Borrowings Abroad)

Mr. Green: asked the Chancellor of the Exchequer whether the 75 per cent. Treasury guarantee on borrowings abroad by public authorities is still in force.

Mr. Higgins: If my hon. Friend is referring to the special arrangements for forward exchange cover established in 1969 (which apply to 100 per cent. of such borrowing), the answer is yes.

Mr. Green: Does my hon. Friend appreciate that if the figure is 100 per cent. and not 75 per cent., it simply underlines the importance of this Question? Does he further appreciate that to borrow abroad in order to invest abroad is one thing, but to borrow abroad in order to spend at home is quite another? The former does not increase money supply; the latter inevitably must.

Mr. Higgins: I agree with the first part of my hon. Friend's supplementary question. Clearly, a 100 per cent. scheme is more comprehensive than one involving a figure of only 75 per cent. There is certainly a difference between borrowing abroad to finance overseas investment and borrowing abroad to finance investment in this country. Nonetheless, the scheme gives a useful incentive to borrow abroad; this produces a useful inflow of


medium and long-term foreign exchange because the borrowing is for five years. This is consistent with general exchange control policy for domestic use which has operated since last January.

Mr. Bruce-Gardyne: I hope that my hon. Friend will carefully consider the implications of the last part of his supplementary answer. Surely today the circumstances are totally different from the circumstances which prevailed when the last Government introduced these methods to stimulate overseas borrowing. The last thing we want at the moment is to add to the inflow of funds, which is already causing sufficient embarrassment.

Mr. Higgins: That raises much broader questions of monetary policy, but, obviously, we keep the situation under review as circumstances change and would take fully into account the significance of recent events.

European Economic Community

Mr. Knox: asked the Chancellor of the Exchequer what estimate has now been made of dynamic effects of Great Britain's entry to the European Economic Community.

Mr. Barber: Assuming that satisfactory terms are negotiated, we believe that membership of the enlarged European Economic Community will provide a greatly enhanced opportunity for improvements in our industrial structure, our productivity, and our industrial investment.

Mr. Knox: I accept the practical difficulties of making such assumptions, but would the Chancellor not agree that it would be a good idea to try to carry out this exercise in advance of our entry? Are the difficulties not likely more than to offset the costs of entry? Does he not think that making such estimates now might help to dispel some of the doubts among anti-Marketeers?

Mr. Barber: I will consider what my hon. Friend has said, but there are great difficulties in making absolutely firm quantitative assessments. This has always been recognised.

Mr. Heffer: Does the right hon. Gentleman consider the Common Market

agricultural policy, which is bound to lead to increased food prices, the effect on the inshore fishermen, and the affect on regional policy to be beneficial dynamic benefits of entry into the Community?

Mr. Barber: Obviously, when negotiating in a matter of this kind, some aspects are favourable and some are unfavourable. I take the view—and I respect the hon. Gentleman's view—that on balance without doubt, provided we can get reasonable terms, entry will be to the advantage of this country and will improve the prosperity of our people.

Industrial Output

Mr. Dykes: asked the Chancellor of the Exchequer what was the rise in industrial output in the last two quarters of 1970 and the first quarter of 1971, respectively.

Mr. Maurice Macmillan: Industrial output as measured by the index of industrial production rose by about ¼ per cent. in the third and about ½ per cent. in the fourth quarter of 1970. In the first quarter of 1971, when both the level of activity and the recording of statistics were adversely affected by strikes, the index showed a fall of over 1 per cent.

Mr. Dykes: I am grateful for that reply. Does not the minor image of the figures, particularly the figures for the last quarter, show that there is ample scope and pressing need for further re-flationary measures?

Mr. Macmillan: These are matters which my right hon. Friend keeps under constant review. When his judgment deems that this is so, no doubt he will deal with them accordingly.

Mr. Barnett: Why does the hon. Gentleman not admit, like most honest outside commentators, that at the time of the Budget the figures were different from what they have turned out to be? In these circumstances, why are the Government still sticking to the position of refusing to reflate?

Mr. Macmillan: Since my right hon. Friend has already said that he is unwilling to anticipate his decisions, I am unwilling to anticipate those decisions for him.

Sterling Balances

Mr. Deakins: asked the Chancellor of the Exchequer if the Government have agreed with France any limitations on their freedom of action with regard to the sterling balances.

Mr. Barber: I have nothing to add to the very full statements made by my right hon. Friend the Prime Minister on 24th May and 10th June.

Mr. Deakins: Is the right hon. Gentleman aware that, in view of the tremendous strains to be expected on our balance of payments during and beyond the transitional period before entry into the Community, the Government should make clear to the Six that no rundown of sterling balances can begin until we have solved our balance of payments problems associated with entry, even if by 1980 monetary and economic union has been achieved?

Mr. Barber: The hon. Gentleman will recall that on the previous occasion when I dealt with this Question, before the Prime Minister's statements, I made it clear that if one is considering phasing out sterling's reserve rôle, one factor to be taken into account is that we would have to find a means to avoid an unacceptable burden being borne by the United Kingdom. That remains the position.

Mr. Roy Jenkins: Has the right hon. Gentleman not contemplated a means which would be beneficial and in relation to which there is no burden, unacceptable or intolerable, by which these balances, which were a form of world liquidity, perhaps to a greater extent than today, can be taken over, though with a debit balance to us, by some other organisation?

Mr. Barber: It is true that the rundown of sterling's reserve rôle—and I agree with the right hon. Gentleman on this—implies the replacement of sterling balances, or the greater part of them, by some alternative assets. Clearly, arrangements would have to be made for sterling holders to acquire these assets and for the United Kingdom to undertake some alternative liability, but all this would require international discussion and co-operation with those concerned.

Dollar Reserves

Mr. Bruce-Gardyne: asked the Chancellor of the Exchequer what was the proportion of dollars held in the United Kingdom gold and foreign currency reserves at the end of each of the last five calendar years, and at the latest date for which figures are available.

Mr. Higgins: The amount of dollars, or of any other convertible currency held in the United Kingdom reserves, is not published separately.

Mr. Bruce-Gardyne: But is it not a fact that dollars and other foreign currencies now exceed gold holdings by about 75 per cent., and is this not a totally unprecedented situation? Is it not evident that the Bank of England is positively awash with dollars, and is it not inevitable that this will complicate greatly the problem of controlling the domestic money supply?

Mr. Higgins: As I have said, it is not usual to give figures for the amount of specific currencies held in the exchange equalisation account, which it is generally recognised, as my hon. Friend knows, is kept confidential.

Savings

Mr. William Clark: asked the Chancellor of the Exchequer whether he is satisfied with the rate of increase in savings; and if he will make a statement.

Mr. Barber: I doubt if I shall ever be entirely satisfied with the rate of increase in savings; but certainly there has been a considerable improvement. National Savings have been doing better than at any time since 1964–65, and total personal savings are rising substantially.

Mr. Clark: Would my right hon. Friend not agree that, although his answer is encouraging, there is still a need for even more savings? Would he give more thought to giving tax incentives to savings geared to equities and similar growth stocks, rather than gearing the whole of our fiscal incentives to Government stocks?

Mr. Barber: I will consider any reasonable proposals for encouraging savings, which all successive Chancellors have recognised are of immense importance and advantage to our country.

Level of Demand

Mr. Strang: asked the Chancellor of the Exchequer to what extent the estimates of the level of demand in the economy this winter which he used when framing his Budget have had to be revised in the light of subsequent information on the state of the economy.

Mr. Barber: The partial information which has come in since the Budget suggests that the level of demand in the early months of this year may have been somewhat lower than the out-turn which was expected at the time of framing the Budget forecasts, However, no full assessment will be possible until the information is more complete.

Mr. Strang: Is the present level of unemployment in line with what the Chancellor envisaged for the economy when he made his Budget Statement?

Mr. Barber: As I said at the time, I thought it was possible that the level of unemployment would increase somewhat for a time, but that the objective of the Budget was to ensure that it then levelled out.

Mr. Roy Jenkins: Is the right hon. Gentleman aware that his hon. Friend the Minister of State, whose views on this matter we all respect, has been rather more forthcoming on this matter? I do not ask the Chancellor to predict the future, since he cannot do that, but will he say whether at the present moment, on 15th June, he regards the position on investment, employment and the rate of growth as satisfactory in relation to his Budget judgment?

Mr. Barber: I have already at an earlier stage, in answer to another Question, dealt with the principal Budget forecast for the gross domestic product. Obviously, I do not consider that the level of unemployment or the prospects for investment are in any way satisfactory, but I believe, as I have said previously—and the right hon. Gentleman took the same view when he was Chancellor of the Exchequer—that one cannot chop and change from month to month. I have always taken the view that if it should be desirable—this is the only sensible view for any Chancellor to take—that there should be changes during the course of the year, they should be made. This

is not an admission of weakness but a sensible view to take depending on circumstances. At this stage I do not propose to say any more, for the simple reason that I believe it is right that if and when changes are to be made they should be announced at the time.

Mr. Roy Jenkins: I am sorry to come back to this matter again, but it is of central importance. I accept that the Chancellor of the Exchequer must maintain his freedom of judgment for the rest of the year, but in present circumstances the House is entitled to know from him whether as of this day he still regards his Budget judgment as right.

Mr. Barber: I have already said what I have to say on that central forecast of the Budget Statement. The right hon. Gentleman referred to what my hon. Friend the Minister of State said in answer to an earlier Question. What he pointed out, which is highly relevant, is that already at this particular time the halving of S.E.T. has not yet taken place but will take place as from 5th July and involves some £300 million; that the improvement in child allowances, amounting to some £200 million, also will not become fully effective in pay packets until July, and that in September there will be an increase in retirement pensions and associated benefits.

Licensing Hours

Mr. William Price: asked the Chancellor of the Exchequer what study has been made of the likely effects on revenue from liquor of any extension of licensing hours.

Mr. Higgins: No quantitative estimates have been made.

Mr. Price: Is the Minister aware that if the Home Secretary gets his way and inflicts on this country continental licensing hours, meeting the substantial overheads involved in running public houses until three o'clock in the morning will involve a substantial increase in the cost of beer and spirits, people will be forced to drink a great deal less, and the loser will be the Exchequer by tens of millions of pounds a year?

Mr. Higgins: I am aware that this has been alleged, but it has also been suggested that longer licensing hours might lead to an increase in consumption.

Canteen Meals and Luncheon Vouchers (Tax Allowance)

Mr. Ashton: asked the Chancellor of the Exchequer what is the annual cost to the Exchequer of tax relief or concessions to employers for the provision of canteen meals and luncheon vouchers.

Mr. Higgins: Expenditure by employers on canteen meals is not known separately from other business costs. The extra tax that would accrue if the expenditure on luncheon vouchers were disallowed and no other expenditure was substituted is estimated at £7 million.

Mr. Ashton: I suggest that the Minister has rather dodged the Question by giving that answer. Has the hon. Gentleman seen column 48 of HANDARD yesterday where the Secretary of State for Education said that the subsidy on school dinners is only £5 million a year? Does he agree that subsidy for dinners in industry is costing the Exchequer more than that amount? If industry can have this subsidy for meals, surely it should be given to schoolchildren as well.

Mr. Higgins: I think I gave a very clear answer to the hon. Gentleman's Question. I sought to give him the fullest possible answer that I could. The other point raises a different question.

Clearing Banks (Deposit or Savings Accounts)

Dr. Gilbert: asked the Chancellor of the Exchequer if the clearing banks are now free to compete for deposit or savings accounts.

Mr. Maurice Macmillan: The new proposals recently put forward by the Bank of England are designed to replace the ceilings on bank lending that have discouraged competition in the past by more flexible methods of control, and it is part of these proposals that the clearing banks' collective agreements on interest rates should be ended.

Dr. Gilbert: The hon. Gentleman has not answered the Question. Will he tell us whether the clearing banks will be free to compete for deposit or savings accounts? Does he accept that any failure to allow them to do so will be a serious flaw in what is otherwise an excellent document which has come from the

Bank of England? Can he give us any idea when the Bank of England's proposals are likely to take effect?

Mr. Macmillan: The cartel is likely to be ended when the new proposals have been discussed and brought into action. The banks will then be completely free to compete.

Hire Purchase

Mr. Hordern: asked the Chancellor of the Exchequer whether he is satisfied that the present method of influencing hire-purchase transactions through controlling deposits and time for repayment is appropriate; and if he will make a statement.

Mr. Barber: The use of hire-purchase terms control as an economic regulator has been causing increasing concern over the years, but it does continue to make an important contribution to demand management, and must remain until general methods of control can be developed more effectively.

Mr. Hordern: If my right hon. Friend accepts the Crowther Committee's recommendations, can he say when he thinks he will be able to carry them out?

Mr. Barber: I cannot say that, but terms control will need to be reviewed in the light of the operation of the new techniques of credit control.

Post-War Credits

Mr. Dempsey: asked the Chancellor of the Exchequer what is the total amount of post-war credits still due to be repaid; and by what date he expects the outstanding repayments to be made.

Mr. Maurice Macmillan: The amount of post-war credits outstanding at 30th April, 1971, is estimated to be £192 million, including £47½ million accrued interest. I cannot forecast when repayment will be completed.

Mr. Dempsey: Does the Minister agree that since these credits were deducted the purchasing power of the pound has fallen enormously and that if they are not repaid now they will continue to erode? Is it not time there was some morality in the Government's mind to repay to the rightful owners moneys compulsorily taken at that time?

Mr. Macmillan: Successive Governments have decided to do their best to repay post-war credits as soon as possible. At the moment they are being repaid at the rate of £12 million to £13 million a year, plus interest of £4 million.

Mr. Jessel: Will my hon. Friend bear in mind that if at any time in future it seems right to put more purchasing power into the economy, the early repayment of post-war credits would be a good way of doing it, because a large proportion of holders are elderly people who are not very well off and a large proportion of the sums involved would then be spent?

Mr. Macmillan: I am sure that my right hon. Friend heard my hon. Friend's remarks and will bear them in mind.

European Monetary Fund

Sir B. Rhys Williams: asked the Chancellor of the Exchequer if he will initiate discussions with a view to the setting up of a European Monetary Fund.

Mr. Barber: Such ideas may well have a place in the economic and monetary future of the European Economic Community. As members of an enlarged Community, we would look forward to playing a full part in the consideration of such developments.

Sir B. Rhys Williams: I welcome that reply. May I ask whether the rather comical clandestine monthly tittup to Basle by nameless notables, and their meetings there, could have a little less authority in future?

Mr. Barber: I am not sure about the point of my hon. Friend's supplementary question. I can only say that I have not recently been to Basle.

Mr. Deakins: Would not the creation of such a European fund detract from the value of the work being undertaken by the International Monetary Fund?

Mr. Barber: I do not think so. Obviously, the International Monetary Fund is, and must remain, the proper international forum for discussions on the world monetary system. In looking at my hon. Friend's Question, I assumed that he was thinking of something on the lines of the European Monetary Co-operation Fund, which was discussed in the Werner Report

as a possible future development in European monetary integration.

Oral Answers to Questions — EUROPEAN ECONOMIC COMMUNITY

Dr. Gilbert: asked the Prime Minister if he is satisfied with the coordination between the Foreign Office, the Stationery Office and the Central Office of Information, with respect to the production of Her Majesty's Government's fact sheets on the Common Market; and if he will make a statement.

The Prime Minister (Mr. Edward Heath): Yes, Sir.

Dr. Gilbert: Is the Prime Minister aware that fact sheet No. 5 on E.F.T.A. makes no reference to his agreement with the President of France that no new tariff barriers will be erected between the Common Market and those members of E.F.T.A. which are not candidates for admission? Will he explain this omission and tell us what economic benefits we might expect to obtain over and above those which the non-candidate countries of E.F.T.A. would get by virtue of this guarantee that there will be no new trade barriers?

The Prime Minister: On the first part of the hon. Gentleman's supplementary question, the explanation is that this particular fact sheet was prepared before my meeting with the President of France. Fact sheets are intended to deal with the basic facts of the Community, not with the arrangements which are being made in the negotiations until these problems have been dealt with in the negotiations. Any information about the results of negotiations will be published in full in the White Paper as soon as the major problems have been dealt with.
The hon. Gentleman has returned to a Question which he asked recently, about which I think there is some misunderstanding. What was intended by the statement about E.F.T.A. was that there was no desire by the President of France to see tariffs raised between E.F.T.A. countries not members of an enlarged Community and the members of an enlarged Community until there had been a proper opportunity of working out solutions. This is quite different from the position of an E.F.T.A. country which


becomes a full member of the Community.

Sir D. Walker-Smith: Will my right hon. Friend ensure that all factual information, whether in the White Paper or through the Central Office of Information, includes a reference to the frank and manly admission by the Secretary of State for Trade and Industry at Stockholm, and confirmed in this House yesterday, that, whatever his personal opinion may be, as a matter of fact the so-called dynamic effects can be neither measured nor assessed?

The Prime Minister: Obviously, certain calculations can be made of the dynamic effects of entry. My right hon. Friend was not saying that we cannot make assessments of the growth of the United Kingdom economy in an enlarged Community, nor yet that we cannot make assessments of the growth of the economy in an enlarged Community as a whole. This cannot be put into every fact sheet, but it is a matter which will be dealt with as succinctly as possible in the White Paper.

Oral Answers to Questions — BROMSGROVE

Mr. Skinner: asked the Prime Minister if he will make an official visit to Bromsgrove.

The Prime Minister: I have at present no plans to visit either Bromsgrove or Bolsover.

Mr. Skinner: All is not lost. The Prime Minister could consider going to Macclesfield, and he could leave behind him his political private secretary, Mr. Douglas Hurd, the man who ran away from the Tory selection conference because he found that the political path in Macclesfield did not lead to Europe. If the Prime Minister cannot go to Macclesfield, will he issue a writ for the by-election there before the Summer Recess?

The Prime Minister: I think that when the hon. Gentleman reflects on what he said about an individual who is a private secretary and cannot answer for himself, he will realise that his comment is not in accordance with the general traditions of the House. The person concerned wishes for nothing more than to be

judged on his merits as a candidate, in the same way as anybody else is, and it is regrettable that on the last two occasions, because of similar comments, that has not been possible.

Mr. Montgomery: Can my right hon. Friend say whether he has any plans to visit other parts of the West Midlands in the near future?

The Prime Minister: I am going to make an official visit to the West Midlands on 30th September and 1st October.

Mr. Terry Davis: Is the Prime Minister aware of the totally impossible situation into which he has put the Conservative candidates for both Bromsgrove and Macclesfield by not keeping either of the two most important promises which he made a year ago; namely, his promise to reduce unemployment, and his promise to reduce the rise in prices?

The Prime Minister: If the hon. Gentleman will now take the opportunity of studying the matter, instead of carrying on his election campaign, he will see that selective employment tax, which is being halved, has already cut prices, and on 5th July will help to cut prices still further. Perhaps the hon. Gentleman made a point of telling the electorate of the tax reductions through children's allowances, which will take place in July, of the help for lower-paid workers, which will take effect in August, and the help for old-age pensioners, which will be provided in September?

Mr. Harold Wilson: Now that the Minister of Agriculture, Fisheries and Food has turned Queen's Evidence, none of the Prime Minister's alibis is going to stand up. Is the right hon. Gentleman aware how much the whole House welcomed what he said in answer to my hon. Friend the Member for Bolsover (Mr. Skinner), when he referred to the inability of private secretaries and others to be able to speak for themselves? Does that mean that the right hon. Gentleman regrets some of the things that he said in 1965 about some of the advisers then in Downing Street and the Treasury? In view of the honours which the right hon. Gentleman has loaded on a great public servant, does he now regret having called Professor Zuckermann, as he called him, an expert on tadpoles?

The Prime Minister: To say that the particular gentleman is an expert is not a criticism. I withdrew my remarks afterwards because, as I told Sir Solly, I had not recognised that he was not an expert on tadpoles but an expert on apes.

Oral Answers to Questions — HUMAN TISSUES ACT, 1961

Mr. Dalyell: asked the Prime Minister if he is satisfied with the co-ordination between the Secretary of State for the Home Department, the Secretary of State for Social Services and the Attorney-General in making proposals to amend the Human Tissue Act, 1961, and implement the Report on the Transplant of Human Organs under the chairmanship of Sir Hector Maclennan.

The Prime Minister: My right hon. Friends are together continuing to keep these matters under review, but the Government have at present no plans to legislate. Meanwhile there is nothing to prevent voluntary bequests of organs for transplantation.

Mr. Dalyell: Is the Prime Minister aware that many hon. Members would like this subject to have a place in the Queen's Speech in November?

The Prime Minister: I realise that it is not only a question of opinion in the medical profession but that many hon. and right hon. Members have expressed the view that there should be legislation on this subject. Nevertheless, I think that if the hon. Gentleman studies the matter closely he will recognise that it is extremely controversial. What is required is a clear indication that legislation will improve the situation, and at the moment I think that that clear and convincing proof is lacking.

Dr. Summerskill: Would not the Prime Minister agree that the present law relating to transplants is obsolete in many respects and in need of clarification, and that it is urgent that a greater supply of kidneys should be available for transplants on the lines of the recommendations in the Report, in order to save thousands of lives every year?

The Prime Minister: I am not absolutely certain that I can agree with the last part of the hon. Lady's question.

but, as I have said, this is now under urgent consideration by the Government. If the hon. Lady is referring to difficulties in the law relating to coroners—and there are certain aspects of this which are important—I can tell her that this comes within the terms of reference of the Brodrick Committee, which is expected to report later in the year.

Oral Answers to Questions — NEW ZEALAND

Mr. William Hamilton: asked the Prime Minister if he will now seek to make an early official visit to New Zealand.

The Prime Minister: I have at present no plans to do so, but I have recently had full discussions in London with both the Prime Minister of New Zealand and the Deputy Prime Minister.

Mr. Hamilton: If the right hon. Gentleman is not going to visit Bolsolver, or Bromsgrove, or Macclesfield, or New Zealand, where is he going? Does he recollect that when Mr. Ian Smith rebelled against the Crown some of his right hon. Friends and hon. Friends talked about the Rhodesians as our kith and kin, a phrase which is much more accurate when used about the New Zealanders than it ever was in relation to the Rhodesians—

Hon. Members: Why?

Mr. Hamilton: Because the Rhodesians are mostly South Africans. Will the right hon. Gentleman understand that many hon. Members might support British entry into the E.E.C. but only if we get conditions which are completely satisfactory to the New Zealand economy?

The Prime Minister: When the hon. Gentleman comes to the point of his question, one can consider it seriously. It has always been the position of Governments of both sides that it is necessary to have a proper arrangement for New Zealand in these negotiations. That is what we are endeavouring to secure, and the matter will be under discussion at the next meeting at Luxembourg on 21st and 22nd June.

Mr. Longden: Has my right hon. Friend seen the sane and balanced statement issued by the Government of New


Zealand entitled "What an enlarged E.E.C. means for New Zealand", in which it is stated that if there is a fair deal on a sound economic basis for cheese, butter and lamb, there is no reason why the partnership between New Zealand and Europe should not reward both territories as richly in the future as in the past?

The Prime Minister: Yes, Sir, that is the case, and both the Prime Minister and the Deputy Prime Minister of New Zealand have publicly expressed their confidence in the conduct of these negotiations.

Oral Answers to Questions — NETHERLANDS PRIME MINISTER (VISIT)

Mr. Marten: asked the Prime Minister whether he will invite the Dutch Prime Minister to pay an official visit to Great Britain.

The Prime Minister: The Netherlands Prime Minister would, of course, be welcome in this country at any time, but there are at present no plans for a visit.

Mr. Marten: If he does come, could the Prime Minister discuss with him the question of the disunity amongst the Six about the question of political unity? Could he invite them perhaps to try their hands at speaking with one voice about unity?

The Prime Minister: Perhaps my hon. Friend will appreciate that when the Community is moving towards new policies

this is done through a process of discussion, and that different views may be held by individual countries. That is perfectly understandable, because they are all ancient countries of Europe. But in the process of their discussions they have in the past come to agreements, to which they have then adhered. This is a natural process in the development of a new entity such as the European Community.

Mr. Lane: Is it not clear that the Dutch have made a great contribution to the optimistic, forward-looking mood in continental Europe today, and that if Britain fails to respond to that mood we and our children will regret it?

The Prime Minister: It is true that the Netherlands Government, and the Dutch people supporting them, have been foremost in their desire that Britain should become a member of an enlarged E.E.C, and have taken a prominent part in the negotiations to try to bring that about.

Mr. John D. Grant: Would the right hon. Member for Cowes accept that many of us wholeheartedly stand by the statement which he made just before the last General Election, that he should have the wholehearted consent of the British Parliament and people before we enter the E.E.C? Could he now indicate what he meant by that phrase? Or was that another of his little pre-election jokes which we should not take seriously?

The Prime Minister: The hon. Member will have to await my statement.

Orders of the Day — UPPER CLYDE SHIPBUILDERS

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Fortescue.]

3.31 p.m.

The Secretary of State for Trade and Industry (Mr. John Davies): I will, if I may, make use of this occasion to go somewhat more in detail into two matters of great importance which affect Upper Clyde Shipbuilders. The first is to consider and elaborate more than a brief statement could do yesterday the reasons why, after very careful consideration and thought, I had to come to the painful conclusion that this concern was unlikely within the foreseeable future to reach any reasonable state of viability which would justify the Government in once more putting in a large sum of money to sustain it.
The second is to elaborate equally the steps which are now proposed to try to do what is possible to see survive from this unfortunate situation the best possible part of this shipbuilding industry of the Upper Clyde. Both of these issues are of great importance and interest to both sides of the House and I should like to review objectively the story of this group in the three brief years of its life.
The group was composed of the fusion of a certain number of companies and yards on the Upper Clyde, notably John Brown, Charles Connell, Alexander Stephen and Fairfields, together with a 51 per cent. interest in Yarrow (Shipbuilders) Ltd., which up to that time had been a subsidiary of the Yarrow Company Ltd.
It is worth recalling that Fairfields has a long history of Government interventionary activity before the fusion which gave rise to U.C.S. As early as 1966, Fairfields had been in serious trouble and had been helped out by the then Government and provided with a considerable additional loan, even as well as some considerable subscription to equity. But these five concerns, in one form or another, were fused in February 1968 to form Upper Clyde Shipbuilders.
The inheritance of this group was, I freely admit, uncomfortable. It had inherited a very large number of contracts to build ships of specialised kinds at prices which no doubt at the time of their contracting were regarded as satisfactory but which, in the face of heavy inflationary tendencies and the inadequacy of the escalation provisions within the prices, clearly would not provide profitable operations. One of those inheritances was the QE 2. Hon. Members will remember the many difficulties which ensued before that great ship got into action finally and so successfully. So U.C.S. encountered a great host of different financial problems as its life unfolded.
The first of these, I suppose, was at the very institution of the concern, when the Shipbuilding Industry Board was prevailed upon to undertake to put loans of £5½ million into U.C.S. so as to get the organisation off to a start. Of this, £3½ million was put in at once and a further £2 million was to be reserved for such time as the new group would undertake major capital investment, which would justify the drawing of these additional sums.
Of this £2 million, only about £1·2 million was ever drawn, because there were never the major capital projects which would have justified the drawing of the remainder of the sum. The £1·2 million was largely devoted to building a covered yard at Yarrow's, which I had the pleasure of visiting some time ago and which undoubtedly constitutes a great addition to the facilities of the Clyde.
Not so long after that—a year later—U.C.S. was in trouble once again. This time it had to show that its financial prospects were gloomy indeed, and it turned once more to the Government for help. At this stage, the Government once more, through the vehicle of the Shipbuilding Industry Board, undertook to put another £3 million of equity and £5½ million of outright grants into the concern to try to see it through. At that time it was expected that this was the end of the financial injections into U.C.S., and the then Minister of Technology, the right hon. Member for Bristol, South-East (Mr. Benn), said so very clearly to the world at large. But three months


later, by the end of May, 1969, it was back in trouble again and the financial difficulties were very great.
At this time the Shipbuilding Industry Board, which was consulted about the matter, considered that so great already had been its contribution to U.C.S. that it could not feel it correct, in the light of the demands of the British shipbuilding industry as a whole, to go beyond the funds which it had already made available to U.C.S. So a special arrangement was entered into whereby a further sum of £7 million was made available on loan by the right hon. Gentleman—a special arrangement devised by himself, on easy rates of interest and reasonably easy reimbursement terms, in so far as the loan was to be subordinated to all other creditors.
Shortly after that an arrangement was entered into whereby the originally acquired 51 per cent. interest in Yarrow (Shipbuilders) was to be returned to the Yarrow Company Ltd. under an agreement between the two concerns. This was in recognition of the fact that that acquisition had in any case not served to strengthen the performance either of U.C.S. or of Yarrow (Shipbuilders).
This was the situation on the change of Government last year. It was not very long after the new Government came into office that U.C.S. was once again in trouble. The trouble at this stage was communicated by a member of the Shipbuilding Industry Board who sits on the board of U.C.S., informing the board—the board informed the Government—that the prospects of this company were again so questionable that it must be a matter for concern as to whether the Government were within their rights to continue to maintain shipbuilding credit guarantees to new shipowners who were wishing to pass—

Hon. Members: When?

Mr. Davies: This information was passed in October, 1970.
Accordingly, after considering the information given to them, the Government concluded that they were not within their rights to maintain these guarantees. I would recall to the House that it is not a question of the Government making money available. The Government in fact make available a guarantee to those

who lend money to the shipowners who pass the orders. From these guarantees arise the liabilities for the shipowners, before their ships are delivered, to make progress as the ships are progressively put together.
I am undoubtedly aware that the withholding of these guarantees was a sore blow to U.C.S., but I ask the House to remember that the Minister concerned has responsibility for ensuring not only that the shipowners themselves are credit-worthy in this respect but that there is every reasonable prospect that the ships in question will be delivered to them in due time, and this prospect could not honestly be said to be fulfilled at that time.
This was shortly followed by U.C.S. itself coming to see me and telling me that its troubles were indeed very great and that it had little prospect of being able to get out of a situation of deficit unless a variety of different things were to happen. I will endeavour to enshorten the matter because hon. Members have clearly followed the whole of this history with some interest. It is, however, important to remember just what those things were.
First and foremost, there was the requirement of a substantial additional financial input, and this was to be secured by negotiating with the shipowners who had ships on order with U.C.S. to increase the prices that they were prepared to pay to bring them perhaps more in line with current price levels, but nevertheless to sums over and above the contract prices originally entered into.
The second was a requirement that the total of the Government's input of money by a variety of methods, whether through Fairfields or the Shipbuilding Industry Board, or direct from the Minister of Technology, into the company should be the subject of other interests, with a total reconstruction, to diminish very considerably the company's outside liability—and, incidentally, to diminish the annual outgoings in terms of interest payments.
The third requirement, which was no less a problem to U.C.S., was to obtain a return of the 51 per cent. interest of Yarrow Shipbuilding to Yarrow & Company Ltd. because at that time, through


a complex situation, the future of Yarrow Shipbuilders was itself extremely precarious and the great risk was that Yarrow Shipbuilders might founder and that U.C.S. would founder with it.
I repeat these details simply to show that at that time I, many of my colleagues and many people in my Department spent an enormous amount of time and effort trying to secure the future of both these concerns. After great effort, in which I had innumerable meetings with the management, the shipowners concerned and others, it proved possible to rearrange things in such a way that, without further inputs of Government money to U.C.S., its future could, as U.C.S. saw it, be assured. At that time, U.C.S. spoke confidently about its future. It said that that confidence arose by virtue of arrangements with shipowners and the Government's willingness to see substantially written down the £20 million or so which at that time had been lost. Its whole argument reposed on the fact that we might as well accept the reconstruction because the money had gone. We had no prospect of anything other than that fact—that the money had gone—so that we might as well accept the reconstruction, with a total write-down. Against that background, it seemed likely, U.C.S. said, that the concern was really on the road to recovery and that it foresaw no need for recourse to Government help in future.
It was, therefore, with some real concern, and, I must say, with real dissatisfaction, that I was encountered last week—this only five or six months later—with the news of still further problems.

Dr. J. Dickson Mabon: Is it not a fact that through the director the Government received monthly financial statements and should have known what was happening since February?

Mr. Davies: No. That is not so. [Interruption.]

Mr. Norman Buchan: It should have been so.

Mr. Davies: I will elaborate exactly the situation that occurred. The company went off confident in its ability to attain these objectives and re-enter profitability. It had on its board a member of the Shipbuilding Industry Board, the holder of the

principal interest in U.C.S., though it may be said to do so on behalf of the Government, while being an entirely separate organisation. It was at the insistence of this director, Mr. Mackenzie, that the absence of adequate cash forecasts were enforced on the company's mind so as to bring into commission a special study of its cash position in future. It was as a result of his insistence—

Mr. William Hamilton: When?

Mr. Davies: I think April was the month, I am not sure of the exact date. I was, during this time, pressing strongly for further information about the reconstruction which I had been led to believe was the source of the future of the company.
Be that as it may, after the insistence that there should be this cash forecast, the forecast finally appeared, I am given to understand, in the hands of the management only on Monday of last week. This cash forecast showed a truly alarming state of affairs. It showed, in fact, that by the end of August of this year the company would have debts amounting to over £9 million and that it would have a net asset deficiency of between £4 million and £5 million, and maybe even greater.
Although it still maintained that the corner was shortly to be turned and profits were to be realised, this forecast gave absolutely no reason to believe that within any foreseeable future the serious assets deficiency position of the company would be overcome.
I come to the events of last week. In the light of the information apparently bursting for the first time on the consciousness of the senior management on Monday, communicated to the board on Tuesday, which informed me of the situation, I asked the management to come and tell me the story. The management came to see me on Wednesday to reveal the full seriousness of the situation, which was then brought to my attention officially for the first time.

Mr. Buchan: Officially?

Mr. Davies: Yes, officially. I have been told that there is some question of a letter apparently having been sent in early May. The only letter I have been able to find in the Department


which has any reference to this is one which painted a glowing picture of the profit forecast, though pointing to the fact that it was still in substantial cash difficulties. But bless my soul, it gave no indication whatever of such a serious situation as I was faced with on Wednesday of last week.
The House will recall that it was on Wednesday of last week that the management told me that it would not be able to pay wages after this coming Friday and that it was, therefore, obliged to declare this situation then and there. I was, therefore, given less than 48 hours in which presumably to do something—and the only thing of which they could think was the injection of upwards of £6 million into the company on a loss basis, certainly as far as I was concerned, for it was without any assurance of any positive kind that we would move into a satisfactory and prosperous condition in future.
I sought some time in which to try to consider the situation, and by assuring the company that the Government would, by one means or another, find the means of paying the wages for a further week, I bought the time of an extra day or two. It was on Sunday that the management told me that its estimates, which were by then only five days old, had once again proved to be incorrect and that the company did not have the means to pay the wages this week. Thus, the Government's assurance to provide these means was advanced by a week.
In these circumstances, I ask the House to believe that it would have been an exceedingly imprudent man who would have given any great credence to the assurances I was given that the company would shortly move into profit and that all would shortly be satisfactory. After the repeated experiences, at such short intervals during the three-year life of this company, it was too much to believe that suddenly for some reason everything would be changed—when even during the week during which this information was revealed the estimates themselves had been changed and the ability of the firm to pay wages for one week, which had been foreseen, had suddenly disappeared as if by magic. I cannot believe that anybody who had the responsibility of answering to the House for his handling of funds belonging to the State could possibly

reasonably accept that he was dealing with a certain proposition for the future. I certainly was unprepared to do so. In the light of that, I had to inform the company that I would not make available a large additional sum of money, without assurances of any positive or reasonable kind at all, with a view to enabling it to carry on for goodness knows how long, another three, four or five months, however long it might be, before it returned to the charge again and found that its need once again was for large additional sums.
But at the same time, and very naturally, I realised that the consequences obviously would be dreadfully serious in a number of ways, about which the House has been talking and will continue to talk about today. They would be dreadfully serious, obviously, first and foremost in terms of employment in the area, already in a serious situation; dreadfully serious in terms of the future of the industry as a whole, with this enormous element of the shipbuilding industry of Britain so dangerously threatened, and serious indeed in terms of shipowners too, with their reliance on the ships being built in the yards of U.C.S., currently about 16 ships in course of building, and there is an order book for a further 16 which are not yet commenced.
All these things constituted a very worrying situation which one was faced with almost at the turning of a hand, without time to give adequate careful thought as to the consequences. However, as hon. Members know, the company has now petitioned, and the petition has been granted by the court, to name a provisional liquidator. The provisional liquidator is a certain Mr. Robert Smith of the firm of Arthur Young, McLelland and Moore, which is well known in the area. Mr. Smith is named as provisional liquidator, and during the time of his provisional liquidation he is entitled to survey the size of the problem with which he is faced and to seek so to deal with it as would most benefit the interests of creditors, to whom alone he is responsible. However, I said yesterday that it would be my purpose to seek his co-operation in trying to ensure that, facing the future, we deal, as far as it is possible to deal, with the very great problems to which I have referred. I am sure that the House will be relieved to know that contact


with Mr. Smith has revealed that he is fully prepared so to co-operate and to do all in his power to try to facilitate the most orderly, sensible and humane arrangements which can possibly be brought about on the Clyde.
I also mentioned that it was my intention to try to get together a group of people who would, in their way, have expertise of a kind which would help in this sort of situation, in giving advice to both Mr. Smith and to me. The advice is primarily for me, because the liquidator, as I have said, is responsible only to the creditors and, therefore, the advice of the experts, however valuable, may not be germane to the precise responsibilities of Mr. Smith.
The House will be interested to know that I have already persuaded three very admirable people to help in this way. They are Mr. Alexander McDonald, Chairman of Distillers, who has a very distinguished reputation in accountancy and finance; Sir Alexander Glen, who is very well known in the shipping world; and Mr. David Macdonald, a director of Hill Samuel, an extremely well known banking firm. These three, and perhaps one or two more, will constitute the group which I hope during the course of the next six or eight weeks will be able signally to help the orderly reorganisation and reconstruction of what has been a greatly disappointing concern.
I feel convinced that if the efforts of all concerned are directed towards attaining the best possible result from this unfortunate and tragic episode, very much can be done. The essence of this business is still one which has promise for the future. We are dealing with an industry which has very great prospects. It is not at all an industry without prospects. We are dealing with an industry, in the case of the yards in question, which has undoubtedly either very good facilities or facilities, in some cases, which can be greatly improved, even if some are now past their best. Therefore, the whole effort of the Government certainly, and I hope that of the House as a whole, will be now directed solely to trying to secure from this unhappy circumstance the best possible ultimate result. That is possible, but it will require an intensive effort during the next few weeks. That effort will certainly not be denied by any of those concerned with the future of the industry.

3.57 p.m.

Mr. Anthony Wedgwood Benn: Although the debate is on the Motion for the Adjournment, my right hon. Friends and I regard it as a Motion of censure on the Government—[HON. MEMBERS: "In Government time?"]—

Hon. Members: And on you, too.

Mr. Benn: —for the statement made yesterday and the amplification made today, if for no other reason than that the Minister primarily responsible for regional policy should have chosen to make a speech about Upper Clyde Shipbuilders without regard to his regional responsibilities.
The argument which we put before the House this afternoon is that the statement made yesterday represented the wrong policy, that the motives were political and not economic, that the House was misled by the right hon. Gentleman—I shall come to that shortly—and that he entirely disregarded the wider social considerations for which he is responsible. In putting the argument of the Opposition before the House today, we shall urge an alternative course of action upon him.
The right hon. Gentleman reminded the House of the background and history of the shipbuilding industry. He did not however, remind the House of the situation under which the industry suffered during the period from 1950 to 1964. In 1950 British shipbuilders launched 48 per cent. of the ships launched in the world. By the time Labour were elected in 1964 this figure had shrunk to about 6 per cent. and the main tragedy for the British shipbuilding industry occurred long before the measures taken under the Geddes Report were brought forward.
The industry had a record of appalling management and bad industrial relations. And it was a fragmented industry. When Geddes reported he was able to point out that there was one shipyard in Japan bigger than the whole British shipbuilding industry put together. There was no effective marketing done by the old management, and anyone who wants to find a condemnation of the industry had better read or reread the Geddes Report. There was no link between research and management or production.
In 1966 Geddes recommended a major restructuring of the industry, and this was supported by both sides of the industry. Under that provision the Shipbuilding Industry Board was established. It was agreed by the House—I piloted the legislation through the House and there was no disagreement at that time from either side of the House—that the support for the industry should be linked to the reorganisation of the management of the industry. Lest anybody suppose—for I have seen a Motion tabled about myself—that the only shipbuilders which were helped by the Government were those that had been unsuccessful, let it be clear that Swan Hunter received substantial sums of public money from the Labour Government. I congratulate the hon. Member for Belfast, East (Mr. McMaster), to whom I shall refer again shortly, who constantly pressed the case of Harland and Wolff upon us. Harland and Wolff received substantial sums of money under the Shipbuilding Industry Board. The Greenock Dock, which had been set up as a nationalised concern by the Conservative Government before 1964 at a cost of about £4½ million, went bankrupt in the conditions obtaining, and Lower Clyde, that is Scott and Lithgow, received that dock as part of the reorganisation arrangements. The most difficult conditions of all obtained in Upper Clyde, with Fairfields, which went bankrupt before Geddes reported, and the rest of the Upper Clyde yards.
The problems on Upper Clyde were a great deal worse than in any other part of the United Kingdom. There was the QE2, which had been sponsored by the previous Government and which would have remained as a rusting hulk on the Clyde, like the "Queen Mary" before the war, had it not been for the money put in by the Labour Government under the Industrial Expansion Act. I attended meetings of Ministers at the time, when it was clear that the privately-owned John Brown Company could not complete the QE2, nor could Cunard have coped with it.
It therefore fell to us to pick up the mess that we inherited from the private ownership in the past and to try to implement the Geddes Report. Do not let anyone think that Yarrow's, which are now, as the Secretary of State said, on their own again, did not get substantial

grants of public money. Indeed, the Secretary of State said that he has seen the covered berths. These were financed by taxpayers' money. If vigorous action had not been taken by the Labour Government in the shipbuilding industry, it would, by and large, have gone out of business altogether between 1964 and 1970. The only alternative to the policy we pursued—I shall return to some criticism in a moment—would have been to allow that bankruptcy to have occurred.
It is true—the Minister made some slight reference to this—that when Upper Clyde Shipbuilders came together it had a number of very serious financial crises through the summer of 1969. These crises stemmed from the QE2 and from that inherited losses from the other yards. A very grave situation developed on the Clyde during the summer of 1969.
It was my task to go there and make it clear, as I did on a number of occasions in the yards themselves to the men concerned, that there was no safety net under shipbuilding on Upper Clyde which would allow it to receive unlimited support from Government unless it was prepared to reorganise itself. We knew, and everybody concerned with the industry knew, that it would take a substantial time before Upper Clyde Shipbuilders could reorganise itself. We also knew—this is why I criticise the Secretary of State for not making any reference to his regional responsibilities—that with male unemployment at the level it was in West Central Scotland and on the Clyde, and with 70 per cent. to 80 per cent. of the equipment used in shipbuilding being bought in from other suppliers about 60 per cent. of that being bought in from areas nearby, if Upper Clyde Shipbuilders was allowed to collapse it would be a major tragedy for the Clydeside.
We also knew—I shall return to the question of these marvellous experts that we have heard about—that on any cost-benefit study which was made of the alternative cost of giving further support as compared with the cost of redundancy pay, unemployment pay and all that it would involve to bring in new jobs, our investment in Upper Clyde Shipbuilders made economic sense as well. I sat with Treasury Ministers and with Ministers from the Department of Employment discussing these questions. I am reminded by one of my hon. Friends of the figures.


It costs £1 million per 1,000 workers for their first year of unemployment and £750,000 per 1,000 workers for their second year.
Therefore, we did support Upper Clyde; and we were right to support Upper Clyde. Nothing that the Secretary of State said today leads me to suppose that the decision was wrong, save only one criticism that the Secretary of State might make, namely, that we should have followed his example of Rolls-Royce and nationalised Upper Clyde Shipbuilders at the time.
However, I was not prepared to let the Clyde shipyards become bankrupt at that time, and I was certainly not prepared to recommend to the House that we should compensate the private shipbuilders for the assets which we have had to acquire in any circumstances other than bankruptcy.
Another consideration which influenced us when we considered our policy was that every other shipbuilding country subsidies its shipbuilding industry. When I was in America in April of last year I was told by somebody in the Department of Commerce that it cost 20,000 dollars per merchant seaman in subsidy to keep the American merchant fleet going. That was the way it was evened out. Indeed, President Nixon announced substantial support last year for the shipbuilding industry. In Japan, there is a requirement that home orders have to be placed with Japanese yards. No such requirement exists in the United Kingdom. France and Germany subsidise their shipbuilding industries. Sweden has put money into its yards. Holland, following the example of the Geddes Report, set up a support scheme similar to that which we introduced.

Mr. Julian Ridsdale: Will the right hon. Gentleman admit that in Japan and in Germany there are not the same restrictive practices that operate in this country?

Mr. Benn: If the hon. Gentleman wants to go into the question of restrictive practices he should consider how far restrictive practices are stimulated or removed by a policy of full employment. If a policy of deliberately increasing unemployment is pursued, which is the policy that the Government are pursuing, restrictive practices will return in this industry straight away.
This is an industry which should appeal to the Secretary of State, because there are no tariffs in the shipbuilding industry. Therefore, in contrast with the policy that he has been discussing—"thinking aloud" is his phrase; I am not opposed to thinking aloud; I do a lot of it myself—in connection with the motor industry, we now have a situation where the British shipbuilding industry is being left on its own alone among shipbuilding countries.
In the course of the summer of 1969, as I told the House, I went to Clydeside—to every yard, to every group of workers, to tell them that there was no safety net; and there was no safety net. In June 1969—I come now specifically to the intervention by the hon. Member for Harwich (Mr. Ridsdale)—a reconstruction was agreed bringing in Ken Douglas, a very able shipyard manager who had had great success in his previous post, and a rundown in the labour force was agreed with the unions so as to get productivity up. In December, 1969 a further £7 million was made available.
The result of that reconstruction is there for anyone to study today—an 87 per cent. increase in productivity in steel throughput in the last 12 months, a £90 million order book, and possible profitable orders for product carriers of a standard design at £5 million a copy up to, perhaps, 20 orders that might be obtained.
The Linthouse capacity, which was one of the yards which had originally been shut down and closed out, has now been brought back into production to meet the need. There has been a further plan, which has been mentioned by Mr. Douglas and discussed with the union, for using some of the labour from John Brown on the highly efficient steel fabricating equipment over the river at Govan to provide greater opportunity for higher productivity.
The House may be interested in the figures contained in yesterday's statement made by Upper Clyde Shipbuilders. The concern reports on its progress since it was established:
Despite these difficulties "—
it is referring to the inherited loss—
the throughput of steel today, measured in gross tons, is over 1,300 tons a week, compared with the average in 1970 of 867 tons a week.


In fact, last week the throughput had risen to even above the 1,300 figure.
This has been achieved by a steelwork labour force 16 per cent. less in numbers than in 1970. The overall reduction in the labour force in the past 15 months is 25 per cent.
The statement gives figures for the number of ships delivered as follows—in 1968, three ships delivered; in 1969, seven ships delivered; in 1970, 12 ships delivered; and the programme for 1971 was for 18 ships to be delivered.

Mr. T. G. D. Galbraith: In making these comparisons, is the right hon. Gentleman comparing like with like? Surely the earlier ships were much more sophisticated?

Mr. Benn: The hon. Gentleman has got the point. I congratulate him. The new management has moved away from the old complex ships that made losses on to the Clyde class ships or standardised ships from which profits will come. The hon. Gentleman must know practically nothing about the work done in Upper Clyde if he has missed that point.
I come now to the attitude of the Conservative Opposition during the period that we were in office and to their attitude in Government today. In general terms, there was bitter hostility to the policy that we pursued in respect of the shipbuilding industry. The only exception was those Conservative Members who had shipbuilding constituencies. There is not one Conservative Member sitting for a shipbuilding constituency, whether in Belfast, Tynemouth, whether the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor), who despite his laissez-faire protestations, was pleading for money for Upper Clyde Shipbuilders in the summer of 1969, who was not trying to get money for the shipyards.
The truth is that while the leadership of the Conservative Party was attacking the policy of intervention and preparing the betrayal announced yesterday the individual Members were trying to get every penny that they could.

The Secretary of State for Scotland (Mr. Gordon Campbell): Even the right hon. Gentleman, with his apparently short memory, will know that it was I who spoke from the Opposition Front

Bench on all his statements and Private Notice Questions. As I shall seek to show later, what he is saying is entirely untrue.

Mr. Benn: It is true that the overall Geddes policy—I have said this in the House—appeared at the time to command general support. But the policy of intervention, of which Geddes was the most dramatic example, became the subject of most bitter attack in general. In particular, many Scottish Members—I will not name other than those I have pointed out in respect of their constituencies—came to me privately in London and in Glasgow, pleading for support for Upper Clyde Shipbuilders. They were right to plead for support, for the policy that we pursued was right.
Meanwhile, the Opposition's policy was being prepared in secret. There is a report in The Guardian, today—not the first time that it has appeared. I quote words alleged to have been written by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), whom I do not see present in the House, in a memorandum written in December, 1969. In that memorandum the hon. Gentleman analysed the position—the figures are certainly drawn from fact at the time—and made this recommendation:
We could put in a Government 'butcher' to cut up U.C.S. and to sell (cheaply) to Lower Clyde and others the assets of U.C.S. to minimise upheaval and dislocation. I am having further views on the practicability of such an operation, which I will report
(d) After liquidation or reconstruction as above, we should sell the Government holding in U.C.S. even for a pittance.
That is the hon. Gentleman, as quoted in The Guardian today from December, 1969, indicating what was taking place in the background.
When the Government came to power we heard from the Secretary of State many references to firms that required Government assistance. We had those references at the party conference and in the Queen's Speech. There was no doubt in the mind of anybody who heard them that Upper Clyde was the target to which the right hon. Gentleman was directing his attention. It came as a bit of a surprise to him and the Cabinet to discover that it was not Upper Clyde that came up first but Rolls-Royce, which


was not what they had intended. Rolls-Royce was then bankrupted, nationalised and subsidised as an example of the Government's rigidity towards firms requiring some Government assistance.

Mr. John Davies: How does the right hon. Gentleman reconcile what he has just said with the extraordinary efforts that I and others deployed over the turn of the year to try to see U.C.S. through?

Mr. Benn: Very easily, because the Ridley policy did not come out in today's Guardian. It appeared on 6th May 1970, and the reference to the Government butcher and the cutting up linked to Shadow Cabinet thinking was made public before the election. Everybody to whom I have spoken about Upper Clyde Shipbuilders since the Government came to power knew perfectly well that the Government were determined that the yard would receive no support.

Mr. Davies: Would the right lion. Gentleman be so kind as to answer my question?

Mr. Benn: I am answering the question in these terms: that confidence in the continuation of Upper Clyde Shipbuilders had been undermined by Conservative Government thinking before and since the election.
I will come now to the policy which the right hon. Gentleman claimed in his speech was the policy that he had pursued. First, there was the dismantling of the I.R.C., which would have been in a position, in a situation like the present one, to contribute something to the solution to the problem the right hon. Gentleman now faces. Second, the Industrial Expansion Act, under which we financed the QE2, was repealed. Third, the right hon. Gentleman attacked the Shipbuilding Industry Board, in a speech that I heard at the Press Gallery lunch, an open meeting, as a body "designed to distort" the judgment of people in shipbuilding on matters of this kind.
Then, in November, the right hon. Gentleman held up the payment of credits to U.C.S. He admits today for the first time that he had a responsibility to do that. However, he did not tell Upper Clyde Shipbuilders that he was doing it. I understand from the management that

it learnt accidentally that the credits were being held up when it telephoned the Department in November. No public statement was made to the House, just as with Vehicle and General, where we were told it was "not beneficial" to reveal to Parliament the right hon. Gentleman's policy. He knew, and all the people who were building ships for Upper Clyde, knew from November to February that he had, at best, little confidence in the capacity of U.C.S. to survive. When he says that the figures changed from day to day—and that is a very real problem for a Minister—he knows very well that figures change as confidence changes. When it is thought that the Government will allow a company to go bankrupt people demand their money, and that is why the figures alter from one week to another. [HON. MEMBERS: "Resign."]
The right hon. Gentleman has come out with his new policy at a time when there are 117,000 out of work in Scotland, 7·4 per cent. male unemployment compared with, I think, 4·5 per cent. in England. In Glasgow there are 27,000 men out of work, a proportion of 9·6 per cent., and a figure of unemployment higher than in Northern Ireland. If there were to be the sort of unemployment that could follow from the right hon. Gentleman's decision, it would increase unemployment by 10 per cent. in Scotland.
Let us now examine the Government's case as presented by the right hon. Gentleman today. First, he made something yesterday and today of saying that Mr. Hepper could not foresee the viability of U.C.S. He said yesterday that Mr. Hepper had not be able to give him any assurance on it. But the assurance Mr. Hepper was unable to give was an assurance of viability without the money that he was seeking. If that money had been made available the forecast of viability made by U.C.S. before the credits were held up was October, 1971, and I understand that with the £5 million credit made available now the company was in a position to forecast accurately that it would be viable by March, 1972.

Mr. John Davies: I am sure that the right hon. Gentleman would not wish to mislead the House. The fact is that the company foresaw a net asset deficiency of between £4 million and £5 million by


the end of August. Is he seriously trying to tell us that within the compass of 12 months the company foresaw that being reversed? If so, the chairman of the company was quite unable to tell me that last Sunday.

Mr. Benn: The right hon. Gentleman had access to the company's monthly figures, because it was provided that they should be made available to his Department. The argument that the figures came as a surprise to him cannot stand examination. There was an S.I.B. director, Mr. Mackenzie, acting for the Government on the board of the company. In May the company wrote to the right hon. Gentleman, but he brushed off the letter because he said that it painted a glowing picture. What did it say? I have an extract here. It said:
While the trading results show a most encouraging trend the cash position continues to be acutely difficult.
It was in early May that the right hon. Gentleman had those figures. The question is, who is misleading the House, the right hon. Gentleman or me?
One of the right hon. Gentleman's own backbenchers, the hon. Member for Glasgow, Hillhead (Mr. Galbraith) asked yesterday whether the unions could have done more to help. The right hon. Gentleman replied that some discussions had occurred with the unions, but
It proved impossible for the unions to subscribe to any such arrangement."—[OFFICIAL REPORT, 14th June, 1971; Vol. 819, c. 36.]
The House should know what the arrangement was. It was that the unions should take a 20 per cent. wage cut and put it in the back of the book to get back later. The management, quite rightly, did not press that solution upon the workers. It was wrong of the right hon. Gentleman to suggest yesterday without greater candour that the unions had in some way at the last minute failed to contribute to a solution to the problem.
We come to what the Government plans for U.C.S. are. The right hon. Gentleman made a very vague statement yesterday and, apart from naming three experts, he said practically nothing more today. The Clydebridge British Steel Corporation works is having to cut down overtime because of the situation and, I believe, is to lay off men. There will be

further bankruptcies on the Clyde among the supplier companies. Unemployment will rise.
Who are the experts that the right hon. Gentleman named? The I.R.C. has gone; the Shipbuilding Industry Board has been attacked. If the right hon. Gentleman had asked the Capability Unit, he would have been given the figures of the cost of liquidation against the cost of support, the figures that I gave the right hon. Gentleman. I take it that the Capability Unit is there to bring into account social security and redundancy payments and the cost of providing new jobs, which is about £1,000 to £1,500 per job. Lord Rothschild would have brought those figures in. But the right hon. Gentleman did not consult any of those people. He certainly did not consult the people in the yards. There are 7,300 people in Upper Clyde, and they are pretty expert on the problems of the yard. The right hon. Gentleman has appointed a banker, somebody from the Distillers Company and a distinguished chartered accountant to tell him what to do with a yard that has made notable progress over the past few years.
I attended two meetings about Upper Clyde yesterday, one in the House, when I heard the Secretary of State's hon. Friends cheer his statement, and the other in Clydebank Town Hall, when I met the shop stewards. The resentment there that the right hon. Gentleman had not the guts to go and see them himself passes belief. If he had had the courage to go to Clydeside and talk to the men concerned he would have heard what they wanted to say to him. I took a pencil to write down their comments, and I will tell the right hon. Gentleman what they said.

Mr. John Davies: Before the right hon. Gentleman does so, will he be kind enough to recall that I did go to Clyde-side a matter of three to four weeks ago and stated publicly, in the face of many men of precisely the kind he is speaking about, exactly what the Government's policy on these matters was?

Mr. Benn: The point about going to Clydeside—[HON. MEMBERS: "Withdraw."]—is not just to shout at the men but to listen to what they have to say, to go to every yard and meet the shop stewards, the staff and the manual workers and listen to them.
The men said—and I believe it to be true—that a political assassination of Upper Clyde lies behind what has happened. They know that the Government has 49 per cent. and the unions have 1½ per cent. of the shares of Upper Clyde, deriving from their putting their own money into Fairfields to keep it going, so that makes a total of over 50 per cent. Fairfields is the one yard that might be attractive if people were trying to hive it off, because it has done very well under the new management.
The shop stewards said that the surge in productivity of 87 per cent. in a year to which I have referred was—and I wrote down their words,
Because the men and the management have got closer together.
They also said:
We are not going to give up the fruits of three years' work and have these yards closed, and we are not going to accept hiving off.
The House would be well advised to heed those words.
After all the debates on industrial relations and the speeches by the Prime Minister and the Secretary of State for Employment, we are faced with this situation; workers staying in their yards, working in their yards without guarantee of pay because they believe in what they have been doing over the past three years. Is that to be an unfair industrial practice under the code of conduct to be provided under the Industrial Relations Act?
The greatest gain in the three years' work that has been done in Upper Clyde is the transformation of the labour force from people utterly dejected by the failures of private management; the restructuring of the unions; and the assumption of responsibility. Now the Government have awakened a force in Scotland, and I believe in industry generally, that will not easily be put back.

Mr. Peter Rost: Can the right hon. Gentleman explain why, if in his opinion the shipyards are so viable and offer future profitability, that opinion is not shared by anyone else, particularly the other shareholders, and therefore why it is not possible to raise other finance outside the Government?

Mr. Benn: If the hon. Gentleman thinks that bankers are the only people

who can tell us what is sensible and what is not sensible to do, then, among many other companies, we would not have a Rolls-Royce. Our view is that the company should be nationalised since the record of the private shareholders in the shipbuilding industry is not very good. The responsibility for the management should be decided in the yard, and I must say I find it hard to understand why the Government should deny £5 million to keep 27,000 Scottish shipbuilding and engineering workers going, when they are preparing to pay hundreds of millions of £s to keep the French farmers going under the Common Market agricultural policy—[Interruption.]

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. I am anxious to hear the right hon. Gentleman.

Mr. Benn: —and as a result allow British steel workers to become redundant so that they can be recruited for the German steel yards.
I come to what the right hon. Gentleman said yesterday about the "odious hypocrisy" of which I am guilty. I want to read what the right hon. Gentleman said yesterday. He said:
I really think that the odious hypocrisy comes from the other side.

Hon. Members: Hear, hear.

Mr. Benn: Mr. Benn:
May I read to the House what the right hon. Gentleman said in December 1969? He said:
'After giving the most careful consideration to these proposals, the Government have regretfully concluded that, having regard to the need to contain Government expenditure, there is not sufficient priority to justify the investment of further public funds in this enterprise in the face of the many competing demands on national resources."—[OFFICIAL REPORT, 2nd December 1969; Vol. 792, c. 1305.]
In view of that "—
said the right hon. Gentleman—
I am horrified at what the right hon. Gentleman has just said."—[OFFICIAL REPORT, 14th June, 1971; Vol. 819, c. 34.]

I take it that the argument is that having said that about U.C.S. it was hypocritical of me now to urge further support. I take it that was the point?

Mr. John Davies: indicated assent.

Mr. Benn: Did the right hon. Gentleman check the quotation personally?

Hon. Members: Answer.

Mr. Benn: I checked the quotation and the words were used on 2nd December, not about Upper Clyde Shipbuilders but about the Beagle Aircraft Company.

Hon. Members: Oh.

Mr. Davies: rose—

Hon. Members: Resign.

Mr. Benn: The right hon. Gentleman has had 24 hours to check that quotation. It was picked up by the Daily Telegraph and The Times in its leading article. I did make a statement on Upper Clyde Shipbuilders, but I made it on 11th December, 1969. This is what I said:
However, the company has been seeking ways of improving its position in recent months, and to allow it a further period in which to show results the Government have decided to introduce fresh legislation to provide assistance to this company by way of loans not exceeding £7 million …"—[OFFICIAL REPORT, 11th December, 1969; Vol. 793, c. 662–3.]
The right hon. Gentleman totally misled the House.

Mr. Davies: rose—

Hon. Members: Resign.

Mr. Deputy Speaker: Order. I hope that the House of Commons will be fair and allow the right hon. Gentleman to reply to the charge made against him. I hope that we will hear him in silence.

Mr. Davies: I am very ready to apologise to the right hon. Gentleman for having quoted a remark he made about Beagle in the belief that it was made about U.C.S. I would, nonetheless, ask him to confirm whether he did not make a remark in exactly the same terms about U.C.S. outside this House?

Mr. Benn: I accept the right hon. Gentleman's apology wholeheartedly. If I may say to him, without discourtesy, an apology should not be qualified by an attempt to reintroduce the charge without any foundation. The House is always ready to accept an apology from an hon. Member if a quotation he has given was, as he now recognises, totally inaccurate. It did not refer to Upper Clyde. At no stage in the whole of the

period when I was responsible for Upper Clyde Shipbuilders did I ever say, in the House or outside, that if the improvements we forecast could be made and must be made were not made that we would not be prepared to continue to support it.
I am in favour of a Select Committee to inquire into the handling of Upper Clyde Shipbuilders, from the very beginning through to the decision made by the Minister yesterday. I made the same offer on Rolls-Royce because I believed that a comparison of the records would confirm the wisdom of the policy we pursued and the failure of the Government's policy. We have not had a Select Committee or any inquiry on Rolls-Royce. Maybe with the American Congress debating it it would be difficult to establish that now. There is no reason whatsoever, now that Upper Clyde Shipbuilders has been forced into liquidation, why we should not have a Select Committee of Parliament to examine the records from the beginning.
It is sometimes customary to demand a Minister's resignation at the end of a speech attacking his policy.

Mr. Gordon Campbell: rose—

Mr. Benn: I certainly do not intend to demand the Minister's resignation today, because his arrogance, inaccuracy, heartlessness and incompetence are typical of the Government of which he is a member and will, ultimately, bring him and his colleagues, all of them, down together.

Mr. Deputy Speaker: Mr. Speaker has asked me to acquaint the House with the fact that there are more than 20 hon. Members who wish to catch the eye of the Chair, quite apart from any of those whom the Chair might feel disposed to call who have not actually written in. It is greatly to be hoped that hon. Members will see fit to contain their speeches at least within 15 minutes.

4.37 p.m.

Mr. T. G. D. Galbraith: After listening to the right hon. Gentleman—

Mr. Hugh D. Brown: . On a point of order, Mr. Deputy Speaker. For obvious reasons, I did not want to interrupt my right hon. Friend when he


extracted an apology from the Minister, but I feel that we should have some guidance from you. An apology merely indicates that someone has made a mistake. There was no indication given by the right hon. Gentleman about whether he knowingly referred to this quotation yesterday. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) can look after himself in terms as to whether he thinks the apology was gracious enough, but there is surely some reflection on a Minister and on a Department—

Mr. Deputy Speaker: I think that the hon. Gentleman has made his point.

Hon. Members: No.

Mr. Deputy Speaker: As I understand it, I cannot accept that it is a point of order. What passes between a Minister on the one hand and an Opposition spokesman on the other, unless it contravenes the rules of order, is not a point of order for me. This is certainly not a point of order.

Mr. Brown: Surely there is a difference between a Minister attempting to make a debating point and using a quotation that refers specifically to another firm, and it must have been known by the Minister—

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman. I realise how strong feelings are about this, but we must have a sense of what is and what is not the prerogative of the Chair in these matters. What the hon. Gentleman is raising has nothing whatever to do with the Chair. I must ask him to accept that what I say is correct and to allow the debate to continue. Mr. Galbraith.

Mr. Brown: Further to that point of order. Would it then be in order to ask the Minister to apologise to the whole House?

Mr. Deputy Speaker: No, I am afraid that it would not be in order. Mr. Galbraith.

Mr. Galbraith: After—

Mr. Andrew Faulds: Did the Minister do it knowingly or did he not? Answer.

Mr. Deputy Speaker: Order. The hon. Member for Birmingham, Smethwick (Mr.

Faulds) knows that he cannot go on like that. I ask him to be a parliamentarian and allow the hon. Member to continue.

Mr. Faulds: On a point of order, Mr. Deputy Speaker. The simple solution to this débâcle would be for the right hon. Gentleman concerned to have the guts to get on his feet and say "Yes" or "No".

Mr. Deputy Speaker: That is not a point of order for me. I am ordered expressly by the whole House to see that debates continue in an orderly manner. Mr. Galbraith.

Mr. Galbraith: Perhaps it will be a case of third time lucky! After listening to the right hon. Member for Bristol, South-East (Mr. Benn), I am still not certain why we are having this debate today. I realise that the right hon. Gentleman probably has a bad conscience because it is his baby that has gone astray. When one does not have much of a case, one's best approach is to abuse one's opponents, as the right hon. Gentleman did yesterday and again today, producing a great deal of heat, and perhaps helping to unite his own party, which gave tongue as if it were at a football match instead of the House of Commons, but certainly not producing much light. I do not see how a debate held today could possibly produce much light. It would have been far better to wait until some of the facts became clearer and to suspend judgment until then. To that extent it is merely a question of blood-letting.

Mr. Gregor Mackenzie: Perhaps the hon. Gentleman does not realise that one purpose of the debate is to allow hon. Members with constituency interests to tell the Secretary of State the strength of their feelings. If the hon. Gentleman were doing his job properly as an hon. Member representing a Glasgow constituency he would tell the Secretary of State the feelings of the people in Glasgow. That would serve the purpose of the debate.

Mr. Galbraith: The hon. Gentleman does not need to tell me how to conduct my business as a representative of one of the Glasgow constituencies. This is-exactly why I am speaking, and I am very glad, Mr. Deputy Speaker, that you have given me the opportunity of speaking so early. It would have been better


to wait until some of the facts became clearer and to suspend judgment until then. But no—the Labour Party is all heart and, unfortunately, no head. With the best will in the world the Labour Party makes the most catastrophic errors —and this is one of them—when in office, and is always out of office when the time comes to collect the pieces. This is the job the Conservative Party always has to do.

Mr. Neil Carmichael: Does the hon. Gentleman support my right hon. Friend's suggestion that an inquiry should be held to find out who was responsible for the problems? My right hon. Friend offered this when Rolls-Royce collapsed, and he offers it now. He believes that his record is quite clear and open, and would be delighted to have a public inquiry.

Mr. Galbraith: I always believe that when I see the right hon. Gentleman I should say, "Get thee behind me, Satan." [HON. MEMBERS: "Cheap!"] I do not think it is cheap. This is a catastrophe, and in a catastrophe there is a natural tendency to look for scapegoats, which is what the hon. Member for Glasgow, Woodside (Mr. Carmichael) wants, and that is what the right hon. Gentleman hopes to get from a Select Committee. The natural tendency is to try to find someone other than oneself to blame, but the fault often lies less in our stars than in ourselves, and it is the parentage of the Upper Clyde Shipbuilders that is wrong.
First, there was the Fairfield experiment, helped on its way to become one of the great loss leaders of the century by Mr. George Brown, as he then was—

Mr. Dick Douglas: There is no evidence of that. Will the hon. Gentleman say what evidence there was when the Fairfield experiment was terminated in 1968, that it was a great loss leader? All the evidence was to the contrary.

Mr. Galbraith: My evidence is different from the hon. Gentleman's. If the hon. Gentleman has any evidence, perhaps he will proceed in due course, if he is fortunate enough to catch your eye, Mr. Deputy Speaker, to give it to the House.

In my opinion, the easy availability of public funds to Fairfield communicated itself to Upper Clyde Shipbuilders, which never seem to have realised that firms are in business not to provide jobs at a loss but to provide jobs at a profit. Anybody can provide jobs at a loss, but to provide jobs at a profit is a much harder task. So it was that when the right hon. Gentleman's ill-fated Shipbuilding Industry Bill became law, and when the Shipbuilding Industry Board used its powers to create the U.C.S.—to coerce, indeed, many of the firms into it—the company began its existence with entirely the wrong outlook. Jobs rather than profits were what mattered, when, of course, in the long term there cannot be jobs without profits.
It gives me no pleasure to point out that all the fears I expressed on Second Reading of the Shipbuilding Industry Bill have turned out to be correct. I would much rather have been proved wrong. What I said on that occasion was not at all well received on Clydeside, but, unfortunately, it has turned out to be true. I said:
The Government and the S.I.B. must face up to the problem of profitability. It is no good reforming the industry and making it look neat and tidy on paper, if in the process we make it impossible for the few profitable firms to continue competing successfully abroad."—[OFFICIAL REPORT, 9th March, 1967; Vol. 742, c. 1820.]
In saying that, I was thinking particularly of Connell and Yarrow. Yarrow, I hope, has managed to extricate itself in time, and should be all right, especially if it is encouraged to submit tenders to any foreign country—and I stress this—any foreign country which may want frigates built. But Connell, a good small yard, looks like sinking with the rest. It is a great tragedy and, although it may surprise hon. Gentlemen opposite, it is a tragedy that I feel acutely and in a personal way. I was brought up on Clyde-side in the years of depression, and I can remember only too well—

Mr. William Hamilton: It passed you by.

Mr. Galbraith: The hon. Member for Fife, West (Mr. William Hamilton) should at least have the decency to recognise that other people have strong feelings as well as himself.

Mr. Hamilton: I am just saying that it passed you by.

Mr. Galbraith: The hon. Gentleman should get out of the House if he cannot make a decent contribution. I remember only too well how the gaunt half-finished hull of the giant Cunarder, which the right hon. Member for Bristol, South-East referred to and which later became the "Queen Mary" dominated the landscape for years on end, a constant reminder of human misery. I can remember the wonderful feeling of hope and elation we all felt when work again began on her.
Much later, when I was Civil Lord of the Admiralty and occupied in relation to the shipbuilding industry much the same position as my right hon. Friend occupies now, I came to know the industry in a different way, and formed a great affection for it and wished it well. But all the time I was afraid that no one in in the industry realised that the heyday of the nineteenth century was over and that its present-day foundations were extremely weak.
At the time of the debate on the Shipbuilding Industry Bill we all paid obeisance to Geddes, to which the right hon. Member for Bristol, South-East referred. There was to be amalgamation and the provision of public cash; but the third, and perhaps the most important, element of the trinity recommended by Geddes was absent. There was no reform of the unions. Instead of the two or three unions recommended, the ancient proliferation remained. That is quite unlike what happened in Japan, to which the right hon. Member for Bristol, South-East referred, but he omitted to refer to the difference in the union structure in Japan.

Mr. Douglas: That is nonsense.

Mr. Galbraith: I know that it is common in the House for the Labour Party to criticise management and for the Conservative Party to have doubts about the unions—probably in both cases unfairly so—but why, when this industry was obviously ailing, did the unions, while accepting the gospel of Geddes in all other respects, fail to apply it to themselves?
Of course, we are told that productivity has gone up, and one would expect it to have gone up. One would expect the throughput of steel to be yet greater

because, as I explained in an intervention, the type of ship being built now is infinitely less sophisticated—ships are just tin boxes with an engine inside—in comparison with what was produced. But productivity can sometimes be produced at too high a price. The more food one gives to a cow the more milk it will produce, but is the little extra milk worth the extra cost of the food? It is no good saying that there are £90 million worth of orders if it takes more than £90 million to build the ships to fulfil the orders. I am afraid that that is likely to be the case, for I am informed that wage rates, which are extremely important in the shipbuilding industry, have more than doubled in the last two or three years, while the earnings of the more highly skilled are at about the £2,000 per annum mark.
The unions have been pricing themselves and their members out of a job. It is tragic, when their own livelihood is is at stake, that they could not do what any sensible person would do, which is to try not to take quite so much out until the industry is clearly more able to stand on its own feet and pay its own way. That is what you or I, Mr. Deputy Speaker, if we were running a little sweetie shop would do. Why should it not equally apply to the shipbuilding industry?
There has been talk about liquidity crises, but everything points to something much more serious than the mere lack of cash flow. If bridging finance were all that was necessary and business prospects otherwise were sound, why come to the Government? Why not go to the banks? That is what they are for. Clearly, the banks were not interested, and so it had to be the Government again, after over £20 million had already been given.
One must look at this question of continuous Government finance from the point of view of other taxpayers in industry and of other shipbuilding companies. Why should one company in one industry be favoured in this way when the extra burden of the tax may well mean that another company in another industry, perhaps with less emotional claims for help, is forced into bankruptcy because of this extra tax burden? It is not fair, and it does not make sense to continue in this way.
Though as a Clydesider I say it with a heavy heart, I do not think this Government, or any Government—even one of which the right hon. Member for Bristol, South-East is a member—could have continued any longer writing these blank cheques. The day for reckoning had more than come. Tobacco came and went; then there was flax and linen with the vast trade and wealth they brought. More recently it has been the heavy industries and shipbuilding, and many have criticised our over-dependence on these heavy industries.
The present changes should be seen in this historic perspective, and such Government money as is available should not be used to prop up an old industry in its original state, as the right hon. Gentleman has suggested. The money should be used to encourage new industries and help the old industries, as I believe is my right hon. Friend's intention, to adjust to changed circumstances. This may mean a slimmer shipbuilding industry on the Clyde, and a tightening of our belts for a bit. But ships have to be built somewhere, and if Clydesiders want to do the job there is no reason why they should not if they make the right efforts and proper sacrifices.
It is in this spirit of making the best of a bad job, of recognising the facts of today and trying to get the most out of them, not harking back to a past that is dead—it is in this spirit of modified hopefulness for the future well-being of the area in which I was born and bred, and which I have the honour to represent, that I give my support, as I believe all fair-minded people will also do, to my right hon. Friend in the Herculean task of encouraging reconstruction. That is what lies ahead of us, and it is to that task that we should all bend our backs without delay and without recrimination.

4.58 p.m.

Dr. J. Dickson Mabon: The most significant part of this debate for me today was to watch the Prime Minister and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), when references were being made to the so-called Ridley plan.
I alluded to this matter in a speech to a shipbuilding audience in Greenock almost exactly a year ago, and I warned the shipbuilders that this is what they

could expect from a Tory Government. Neither the Prime Minister nor the hon. Gentleman today rose to deny the existence of this policy statement. The hon. Gentleman was in the House when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) referred to this matter. It appears in The Guardian today, and I suggest that Ministers should read it. They might recall the policies which they endorsed before the General Election. This all feeds the fires of doubt in our minds since we believe that this step is an inevitable pace forward by the Government in a course for action on which they were determined when they were elected.
There are many yards, including the Lower Clyde, which have been favourably helped by the Shipbuilding Industry Act, which was passed by the Labour Government. That legislation was supported by many hon. Members opposite. I am surprised that the Member for Glasgow, Cathcart (Mr. Edward Taylor), in view of his history on this matter, has not resigned from the Government. I know that personally he must regard this as an appalling decision. I cannot understand how he can stay on in his present office. That Act is a good piece of legislation and is not an ill-fated Measure, such as the hon. Member for Glasgow, Hillhead (Mr. Galbraith) described it. Many yards have prospered because of the existence of that Act. I hope that the Government will learn the bitter lesson of this liquidation and not leave our present yards to go on their own, but will keep a careful eye on the situation. We should make sure that our nation's shipbuilding industry does not go under because of unfair foreign trade practices. The Government have a duty to look after this industry. The Secretary of State is the sponsoring Minister for the shipbuilding industry and in the last analysis is responsible for any problems which exist in the yards. It is not just the Upper Clyde that will suffer by this present calamity. Every other shipbuilding yard will feel the effects of this collapse in some way.
The Secretary of State's speech was incredible. I listened carefully to what he said. I believe that he is an honourable man, but did he have no intention of following the Ridley plan? I appreciate


that all these meetings he described were held and that he wanted to find the right way to go about this matter. I have had some experience of Government, and I find it incredible that he did not know of the financial developments evolving as they did, and only six days ago.
Prior to a debate on 3rd February to which the Secretary of State for Scotland replied on the subject of the Report of the Select Committee on Scottish Affairs—which was the day before Rolls-Royce collapsed—we knew of the many rumours which were circulating both in this House and from well-meaning people outside that there was about to be an announcement of the collapse of the U.C.S. and a declaration by the Government of extraordinary steps. But we were wrong. It was not U.C.S. that went bust. It was Rolls-Royce.
A special development area was announced clearly to meet the loss of jobs in Rolls-Royce. That special development area has done little so far compared to the losses which we face. I was in the United States a fortnight ago and I went to Congress to examine, among other matters, the chances of the Administration getting through what is colloquially called the "Lockheed deal". I regret to tell the House that the chances of getting this deal through are very slender indeed. So let us not assume that the problems of Rolls-Royce have been solved.
U.C.S., to my mind, has been dealt with badly by the Government. If the Minister has nothing to hide, if this is his story and the Ridley plan is a piece of nonsense which we have soaked up from The Guardian, the Minister should agree to a Select Committee to settle once and for all the charge that the Government have conspired to bring down Upper Clyde Shipbuilders for their own doctrinaire reasons. By bringing down U.C.S. they will, in Rolls-Royce fashion, bankrupt the contracts and particularly their obligations to others, get out of their commitments and escape many financial obligations. I do not like the morality of that, but that appears to be the kind of government that we must get used to. There are many suppliers in my constituency which will be hard up. One firm was on the telephone today and was worried about a sum of £100,000. I do not think that that particular firm will go bankrupt—I pray that it will not—but it is possible that

this sum and even smaller amounts will break many people. This is one obligation that the Government seem to have ignored in allowing this process of liquidation to take place in this way. It may be that they hope that the bits and pieces will be picked up by other yards. I am not sure that the Government are not hoping that the Lower Clyde will pick up one or two of the yards in the Upper Clyde. At one time I advocated such a thing to the distress of some of my constituents. I then believed that a union of the yards on the river would be wiser than to leave the situation as it was. So did the Geddes Report. The Lower Clyde could then be in a position of running the entire yards under one strong shipbuilding union.
I am not sure whether the right hon. Gentleman believes that the Lower Clyde will step in. I do not believe that it will, certainly at this stage. The Scott Lithgow Group has labour problems and capital development problems of its own. Who will step in? Will it be Onassis who will buy the yards? What will happen? I was astounded when the right hon. Gentleman sat down after 15 minutes without mentioning the process which was to take place in the next eight or ten weeks. All we know is that the Government are to spend £2 million, instead of the £6 million that was asked for, to pay the men's wages. That is just a start. We do not know what else will be done.
What about the creditors? Will the Government later on, as they did in the Rolls-Royce fiasco, pick up the tabs elsewhere, in which case they will be spending not £2 million but substantially more?
I wholeheartedly endorse what was said by my right hon. Friend the Member for Bristol, South-East, that there should have been a cost analysis carried out by the Capability Unit or a similar body. Will the Government not lose a lot more than £6 million because of what they have done? This is the case the Minister must prove. He may not be able to deploy his entire case today but he should have given the House more information and thus more hope for the future. Many thousands of men are employed in other firms apart from U.C.S., all of whom are in fear of the future of their jobs and are greatly concerned at the situation. Yesterday I was not exactly at my calmest when putting a supplementary question to


one of the Minister's junior colleagues and I said that in Scotland unemployment was 10 per cent. I should have said "in parts of Scotland". My own labour exchange manager gave me the figure for my constituency today, and I might add that Greenock is not directly affected by this matter. I have in my constituency between 100 and 200 workers who, I am told, are directly involved in the U.C.S. but many more, thousands, are involved indirectly in supplying and working for U.C.S. Today the figure of unemployment in my constituency stands at 9·3 per cent. It contains a large number of skilled men. This is very sad. I have said before in Greenock that if U.C.S. goes down the drain it is as much a disaster for my men as it is for the men directly involved, because they will be standing outside the yards and asking for the jobs of my constituents. In 1945 one Conservative candidate said he wanted to get back to a situation of 11 men chasing 10 men's jobs. That ratio is now much higher on Clydeside.
If the Minister wants to absolve his reputation, he should consider seriously whether he will set up a Select Committee. We want to find out what the Government were up to in June, 1970, and particularly in October and November of that year as well as in February, 1971. We want to find out whether it is a conscious act that the Government have been leading up to ever since they adopted this attitude to U.C.S.

Mr. Galbraith: Could the hon. Gentleman explain why any Government should consciously want to do this?

Dr. Mabon: Because the Minister has shown that he resents the lame ducks of industry and that it is not in the interests of working men to be employed by the so-called lame ducks. At the Tory Party conference this was the best example he gave, and in return he was given the biggest cheer of his political life, short though it is. I believe that at least subconsciously he is motivated by a resentment of lame ducks as not in the interests of workers. He can have that theory but he had better examine the facts and see whether this company is truly a lame duck. As a Minister it was my duty at one time to attend meetings with the Ministry of Technology and to argue the

U.C.S. case, which was a much more difficult situation than today. It is a sad epilogue to this affair that just when the company seems to be getting over its great difficulties the Government are pulling the rug from under it.
I must be brief. A Select Committee must not be lightly dismissed, since it would reveal the honourableness of the Government's course of action. We also want to know the mechanism and the process of unemployment and deployment of labour in the next eight weeks. We want to know what special economic measures will be taken to speed up the replacement of these jobs in the West of Scotland which are so desperately needed. We want a positive programme from the Government so that we may know what may happen in the next few months. These are months when Scotland will be experiencing unemployment figures during the summer that we have never known since before the war in 1939. It is as stark as that; and that was before this U.C.S. disaster. This is before Rolls-Royce seeks to escape any further difficulties. The situation could not be worse. This is a black day. If we are to make life better for those whom we represent, the Government must put forward positive programmes tonight and clearly state what they intend to do now in June, July and August of this unhappy year.

5.10 p.m.

Mr. Tom Boardman: The hon. Member for Greenock (Dr. Dickson Mabon) deludes himself if he considers that we shall achieve a reversal of unemployment figures by pouring millions of pounds into an industry which, on the figures which have been supplied, is not viable. All that we should achieve, as his right hon. Friend the Member for Bristol, South-East (Mr. Benn) achieved, would be a postponement of the day.
The hon. Gentleman referred to The Guardian. I suggest that he also refers to the article in The Times today by Maurice Corina and takes note of the facts quoted, and particularly of the final sentence:
Managements and unions ought not to be surprised at the hurtful consequences now that time seems to have run out.
The hon. Gentleman referred to some of my hon. Friends who took part in earlier debates when they supported the


payment of further cash into this industry. He made particular reference to my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward Taylor). Surely the hon. Gentleman recognises that on matters which touch one's own constituents one is inclined and, indeed, duty bound to fight and present the cause for those constituents as powerfully as possible and perhaps without the detached view that those with no constituency interest can take who look at the overall national interest. If rôles were reversed, I am sure that the hon. Gentleman would show the same eloquent language in arguing the cause for his constituents, notwithstanding that it might be against what he believed to be in the national interest if he were not so involved.
I particularly want to refer to the speech of the right hon. Member for Bristol, South-East. He started by saying that the Motion to adjourn the House should be a censure Motion. Perhaps that is the one part of his speech with which my hon. Friends would agree. It should have been a censure Motion upon the right hon. Gentleman himself.

Mr. Donald Stewart: Will the hon. Gentleman give way?

Mr. Boardman: No. We have been asked—

Mr. Stewart: rose—

Mr. Deputy Speaker (Miss Harvie Anderson): Order. The hon. Member for the Western Isles (Mr. Donald Stewart) knows that unless the hon. Member who has the Floor gives way he must resume his seat.

Mr. Boardman: We were enjoined to be brief. I will give way at a later stage if time permits, but not at the moment.
I was sickened by the double-tongued smooth words of the right hon. Gentleman and by the hypocrisy which he displayed.

Mr. William Hannan: On a point of order. Will you, Mr. Deputy Speaker, express an opinion or give guidance about the rules of the House when in the course of a debate an hon. Member wishes to intervene—

Mr. Deputy Speaker: Order. The hon. Gentleman knows that that is not a point of order for the Chair.

Mr. Hannan: Further to that point of order—

Mr. Deputy Speaker: Order. There can be no point of order on what has been said.

Mr. Boardman: The right hon. Member for Bristol, South-East purports to come here as some kind of industrial Robin Hood, but I suggest—

Mr. John Bitten: Robbing Hood.

Mr. Boardman: I agree with my hon. Friend that "Robbing" is perhaps more apt. First, we have to remember the Beagle episode. I should be out of order if I developed that point. However, the quotation by my right hon. Friend in referring to the Beagle episode was absolutely apt to the attitude adopted by the right hon. Member for Bristol, South-East towards Upper Clyde. The way that the right hon. Gentleman gaily disbursed £8 million of the taxpayers' money on that occasion, having from time to time assured the House that the proposition was viable and that tomorrow the sun would be shining and all would be well, was on all fours with his speeches and attitude towards Upper Clyde.
Secondly, there were the right hon. Gentleman's actions concerning Rolls-Royce. Again, I should be out of order if I developed that matter.
Finally—I hope finally—we have the right hon. Gentleman's action concerning Upper Clyde with £25 million of the taxpayers' money down the drain.
The total of those three episodes, which were the right hon. Gentleman's responsibility, come to about £8 per family in this country. That is quite a sum to have been disbursed on those chickens which have come home to roost. All has gone, and with it has gone a great deal more. Not only has public money put into these enterprises been lost, but creditors, suppliers, and so on, have lost money. When the Labour Government produced the funds to support those particular ventures—whether it be Beagle, Rolls-Royce or Upper Clyde—suppliers were given a blanket assurance that with Government support these industries would be profitable and viable and all would be well, so suppliers lost a lot of money, as did the taxpayers. This


should also be put down to the debit of the right hon. Gentleman.

Mr. James Hamilton: Will the hon. Gentleman give way?

Mr. Boardman: No. If the hon. Gentleman was about to say that all the creditors of Beagle were paid in full, that is correct, but again out of the public purse.
To what avail were these millions of pounds wasted? It was not to safeguard jobs. All that was done was to postpone the period when the inevitable unemployment came about. It was postponed in the case of Upper Clyde because it was not electorally convenient for that particular chicken to come home to roost.
It was not done to enhance our reputation, which has suffered in each of these ventures because false promises were put forward and now we have the reality. It is now recognised that these particular projects, which were spoken about so highly by the right hon. Gentleman, have turned out to be very much lame ducks.
It was not done to support or encourage growth points in the economy. There has been no growth and no prospect of growth developing from these projects. It was done to postpone the inevitable.
The situation was correctly, perhaps generously, summed up by Maurice Corina in The Times this morning in the heading to his article,
Too much optimism … too little realism.
I suggest that perhaps it should have been that there was too little judgment and too little courage to take the right decision when it should have been taken.
Had normal commercial considerations been allowed to obtain, there would have been realistic cut-backs in Upper Clyde in 1967 and 1968, and there would now be the prospect of a re-vamped commercially viable industry. It has now become a postponed task which falls on those who have to carry out the reconstruction suggested by my right hon. Friend.
The right hon. Member for Bristol, South-East seemed somewhat confusing regarding past finance. I am not surprised. His record on finance has not been one of particular credit. He seemed unable to distinguish a lack of liquidity from a deficiency in assets. Reference to the OFFICIAL REPORT tomorrow will show

the confusion in his mind. Lack of liquidity in an otherwise viable and profitable industry would not prevent any bridging finance either from the banks, which the right hon. Gentleman derided, or from other sources.
The right hon. Gentleman referred to the contribution of the unions. He suggested that the unions had not failed to contribute to a solution. The question which I throw back is: what did the unions contribute to a solution?

Mr. John Robertson: rose—

Mr. Boardman: I shall give way when I have finished this point.
The record of the unions has not been one of great credit throughout. During the last year, when everyone in the shipbuilding industry knew the serious financial plight of most yards, the number of days lost was nearly double the national average, and at the height of the last Upper Clyde crisis two unions were squabbling over who should fit metal windows to vessels known to be under construction at a loss.

Mr. James Hamilton: When was that?

Mr. Boardman: I said that I would give way to the hon. Member for Paisley (Mr. John Robertson), and I do so now.

Mr. John Robertson: What contribution were the unions asked to make? Which official, of which union, was asked to make a contribution? Was there any consultation between the yard and the general secretary or the president of any of the unions involved?

Mr. Boardman: The right hon. Gentleman's statement was to deny that the unions had refused to make any contribution. The question that I ask is what contribution did they make?

Mr. Richard Buchanan: Will the hon. Gentleman give the date on which he says the unions were squabbling? During the last 12 months U.C.S. has had one of the best industrial relations records in industry.

Mr. Boardman: I am referring to the last Upper Clyde crisis. I accept that since then there has been an increase in productivity, but in talking of the contribution made by the unions the right hon. Gentleman referred with pleasure


to what had been done during the previous three years. I suggest that during those three years the record was patchy, to use a fairly neutral word.
The right hon. Gentleman asked what would be the cost of liquidation compared with the cost of support. The question that I ask is how long that support would be necessary. When would the next tranche be required? For how long would the yard be able to continue? Would it have to come back again for more? By accepting the solution put forward by my right hon. Friend, we shall have a once-for-all operation. It will enable us at the end of the reconstruction to have a viable industry and men who will have been retrained and whose skills can profitably be used in industry.
As my hon. Friend the Member for Glasgow, Hillhead (Mr. Galbraith) said, it is no good fooling ourselves. It is no good continuing to invest in industries that are losing money and have no prospect of making money. In the present state of affairs, all that we would be doing would be to conceal unemployment. The situation is unreal, and quite unacceptable to me. If the £25 million that has been poured into this company had been diverted to setting up a new and viable industry and to retraining people, we might have had there an industry of which hon. Members on both sides could be proud. Instead of that, what we have is a measure of the waste that there has been.
Continuing to provide money to Upper Clyde cannot be viewed in isolation. If a subsidy is given to one yard, it means that that yard is being helped while others are not. It puts the other yards at a disadvantage. It puts them in the position where they may cease to be viable. It may be that as a result of propping up an inefficient yard other yards are forced to close. Doing that is a means of exporting unemployment from one part of the country to another, and that is something which I regard as untenable.
We must face the realities of the situation. Of course there are circumstances in which it is right for public money to be used in certain operations in industry. That has always been conceded, but what is the yardstick to be? Is it right that if there is no prospect of a company paying its way it should continue to be propped up? The answer

must be "No". To use money in that way must be to misuse our national resources and our skills. It cannot be in the interests of the country or of the men concerned to do that. It merely postpones the evil day.
Bearing in mind the record of U.C.S., and remembering that the promise that all would be well tomorrow has been repeated so often and broken just as often, it would be untenable and irresponsible to go on supporting the company in the way that it has been supported in the past. Even the management was unable to look five days ahead with its cash forecast.

Mr. Tom McMillan: I invite the hon. Gentleman to visit Glasgow and make to the shipyard workers there the kind of statement that he has made today in the House.

Mr. Boardman: I welcome the opportunity of visiting Glasgow on some occasion. I should hate the hon. Gentleman to be under the impression that what I am saying is loaded against the skilled workers on Upper Clyde, for whom I have the greatest sympathy, but I do not believe—

Mr. McMillan: The hon. Gentleman has not accepted my invitation.

Mr. Boardman: —that it is in their interests to put off the inevitable day, which will come sooner or later, when it will have to be recognised that this yard, as it is now set up, cannot survive. The Government cannot go on pouring millions of pounds into one yard. To do so would be a grave misuse of resources, and if would do no service to those employed there to hold them in suspense in that way.
The management has shown its inability to make forecasts, and the yard's record is one of such grave error and misfortune that no commercial organisation would support it. The Government are the trustees of public resources, and one must ask whether it is right for them to go further into this venture without abusing their position. It would make no difference if the I.R.C. or the Industrial Expansion Act were still operating. It would make no difference to the proposition that public resources should not be devoted to supporting something which,


in the best judgment that can be applied, cannot become viable.
I ask my right hon. Friend to give us some idea of what further cash injection might be necessary during this period of reconstruction. I accept that public resources should be devoted to this difficult briding operation, but I hope we can be assured that this will be done for only so long as it is necessary to make sure that a recreated and reconstructed viable economic unit is formed and set on the right road.
I started by saying that this should have been a Motion of censure on the right hon. Member for Bristol, South-East, and that remains true. I wish that the right hon. Gentleman were in his place. It is with him, and him alone, that the responsibility lies. The country will recognise that.

5.30 p.m.

Mr. J. Grimond: I hope that the Secretary of State is not leaving, because I want to refer to him at the beginning of my speech. The House cannot let this question of the quotation pass without further inquiry. Of course we accept the Secretary of State's apology, but this House depends upon Government statements being accurate or, if they are not, being corrected at the first opportunity. This is not just a Government statement. It is a Government statement very damaging to the Opposition, as it purports to set out the late Government's view on this whole matter.
As I understand it, the Secretary of State came to the House this afternoon knowing that this quotation was wrong. He made a speech to the House in which, as I understand it, he made no effort to correct it. If he had not been challenged by the right hon. Member for Bristol, South-East (Mr. Benn), would he ever have corrected it? Although we accept his apology, he owes the House some further explanation of why he did not make this apology earlier and correct the record.
I do not want to go into the history of this matter in great detail. I believe that the original conception of Upper Clyde Shipbuilders was mistaken. It was an error to think that by joining together five yards of which two were in some

difficulty and one other was not very profitable one could have put all of them on their feet. I am not one of those who believe that bigger always means better.
There are too many yards in the shipbuilding company, and undoubtedly in the past, although things have improved, there have been industrial troubles which affected this company. But the Government have now been in office for nearly a year and this is another example of the chaotic state of their economic and industrial policies.
We now have inflation accompanied by stagnation, which is particularly damaging in Scotland, and a very high level of unemployment. Apparently the Government are doing nothing about inflation. They disclaim all incomes policy. Even if they succeeded in holding down inflation to 10 or 12 per cent., which is their best hope, it would be very damaging.
I draw their attention to what has lately happened in the Shell Company. There is a lot of criticism of the unions for asking for wage increases of 10, 13 and 15 per cent. The non-executive directors of the Shell Company have just voted themselves not a 15 per cent. increase but two and a half times their present salary. Have the Government made a cheep? Have they dissociated themselves in any way from this gross piece of irresponsibility at the very head of one of the largest companies in this country? No. Who would be in a better position to do it than the Secretary of State for Trade and Industry?

Mr. Tom King: I never dreamed that I would find myself defending the interests of the non-executive directors of Shell, but I have a feeling that I might also be standing up for the Members of this House, because there may shortly be a relevant comparison—

Mr. Eric S. Heffer: Come off it.

Mr. King: If I may be allowed to make the point—

Mr. Heffer: No, it is not a point; it is just stupidity.

Mr. King: —without interruption, it would be fair to draw attention to the


time when the salaries of those nonexecutive directors were last reviewed, which is not irrelevant to the point.

Mr. Heffer: Say what they are now.

Mr. Grimond: That may be so, but this is the moment above all others when if we want restraint we must show an example. It is no good senior management lecturing the unions about asking for 10 per cent. at the bottom of the scale and then taking not 10 or 15 per cent. but 200 or 300 per cent. themselves. If the hon. Member speaks for the Government in this matter, I pray to God that they are out as soon as may be.
We are in danger of having the worst of all worlds. There may be something to be said for letting companies go bankrupt. It is not medicine which I would recommend in all cases, but at least it is conceivable that that would be an economic policy. But what do we get? We get the situation in which the Government are bound to step in. They cannot in this day and age let this number of people be thrown upon the dole, and they are not prepared to do it. Therefore, we have all the damage of a liquidator, and at the end of the day the pieces have to be picked up and some effort made to cement them together again.
I should like to know whether there was any contingency planning. We know from that admirable paper, the Guardian, of which I am a director, what appears to be a very important and interesting piece of news—that the Government were looking ahead. A paper was produced by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), we understand, in which it was contemplated that there might be trouble with this firm.
Did the Government take any steps to ensure that the men who might be thrown out of work, who would not be absorbed by other Clyde shipbuilders, had any other prospect of employment? Have they done anything to promote the public works which would be useful in Glasgow, and would be useful if we are going into the Common Market? No. Have they taken any steps to reflate the Scottish economy by measures applicable only to areas of high unemployment? No. As a result, we now have the worst of all worlds—a collapse of

confidence and a collapse of what passes for a Government's economic policy.
I am also amazed that we were told so little this afternoon about the Government's present plans for Upper Clyde Shipbuilders. If the conduct of the management is as the Secretary of State described it, it is incredible. When we are told by the hon. Member for Leicester, South-West (Mr. Tom Boardman) that had the shipbuilding industry been left to the commercial interests, if this is a typical example of what the commercial interests would have done, we cannot have much faith in that. This alone merits some inquiry.
What the Government have said to the directors, what inquiries they are making into this extraordinary story, we do not know. All we know is that three men—three wise men, as usual—are being asked, out of the blue, to examine the future of this company. None of them knows anything about shipbuilding, and all they will be capable of doing is looking at the matter from a purely commercial point of view and saying that it does not look as though the company will be profitable by accountants' standards.
Even on this there seems to be some doubt. Is the Secretary of State saying that not only were the original contracts unprofitable—that was no fault of the Government—but that the current contracts are unprofitable too? On this most important point, about which there is great confusion, I am assured that the more recent contracts for this firm are not necessarily unprofitable at all, and that many of them have escalation clauses which will allow for some inflation.
Is it the Government's view that not only is there a cash shortage in the firm but that the estimates of cash flows in the next five to 10 years show that even if those orders are completed and the terms fulfilled they will not be profitable? The House at least has a right to have that answered. Surely this answer must be known by now.
The very term "reconstruction" presumably means that shipbuilding in some form will go on at Upper Clyde. I assume that we may take it that these orders will be completed. It would be disastrous for this country if we welshed on the 16 ships which are being built and the 16 more on order. If this is so, was it wise


to deal this savage blow at confidence not only on the Clyde but on every shipbuilding river and to the whole industry of this country by appointing a liquidator?
If the Government's policy really was to kill off "lame ducks", although one may not approve of it, it would at least be a policy. But it is not. It is to do the maximum damage to lame ducks and then try to revive them. This is the most disastrous policy of all.
I should also like to know whether the Government are acting as a Government or as a shareholder. They have certainly advanced large sums to the company. They must have had progress reports and access to the books if they had wanted it. The Government have a representative of the S.I.B. on the board of U.C.S. and, with highly capable people like the new managing director, it is inconceivable that they could not have found out the true state of affairs before last Wednesday.
If the Government were taken by surprise to such an extent, and if they really do not know what to do in the circumstances—that is, if there has been no planning—then an inquiry is fully made out, and it should cover not only the conduct of the Government but every facet of the case.
I cannot believe that hon. Members will be satisfied with either the statement made today or with the vague promise that three wise men, none of whom knows anything about shipbuilding, will inquire into the matter and advise the Minister. There must have been some policy formulated within the Ministry and some sort of planning. If there was, we are entitled to know about it.

5.41 p.m.

Mr. Christopher Tugendhat: When an hon. Member from my part of the country intervenes in a debate of this sort, he does so with a considerable degree of humility, for we have no shipyards or ailing industries in the middle of London. Indeed, we have the lowest level of unemployment in the country. It is, therefore, rather difficult when an hon. Member, whose constituents are not themselves feeling the lash, wishes to contribute to such a debate and offer sympathy to those who are feeling it.
While many hon. Members will disagree with my views, I trust they will appreciate that I intervene because of my belief that Government policy in this matter will benefit the country as a whole. I appreciate, however, that in the short-term it may cause human suffering. We are, of course, paying the price of many years of mismanagement, for which both sides of industry have been responsible. The Government have now felt it necessary, I believe rightly, to take the steps which they have announced, though I appreciate that they may cause suffering in Scotland and other parts of the country.
What the Government have done is right, because if there is one reason above all others why this country has suffered industrial decline since the war—indeed, in some ways since the 1890s—it is because we have been reluctant to change. We have been too anxious to preserve existing forms and industries. This has shown itself in many ways, but particularly in the low level of investment on the part of management and in the reluctance of trade unions to change outdated practices.
It has also shown itself in the fact that for far too long Governments of all complexions have propped up ailing companies and industries which have had no hope of viability in the long run. I have no doubt that if the kind of philosophy which has dominated much of British public life since the war had applied in the middle of the last century, we would have supported the coach lines against the railways and fought to preserve the jobs of the coach drivers by not allowing the railways to expand.
Shipbuilding in general, and Upper Clyde Shipbuilders in particular, are classic examples of this difficulty. Here we have an industry in which too many people and assets have been tied up in an organisation which, from its inception, has staggered from one crisis to another. Management has been unable to forecast the future or produce claims which could hold water by any conceivable set of commercial criteria. This has also been an industry in which trade union cooperation has not always been as great as one would wish.
Whatever arguments hon. Gentlemen opposite adduce, there is no I.R.C., P.I.B., or any series of alphabetical


initials or gimmicks which will make an uneconomic company viable or a poor management a good one. Ships, like other commodities, must be sold to produce a reasonable profit, and to do otherwise serves no purpose, not even the purpose of preserving jobs.
If we are to prosper, we must use the limited resources at our disposal in such a way that they have a chance to pay their way, to the benefit of the men who are thereby provided with jobs and to the benefit of the nation and the taxpayer. In the long run, taking money from the taxpayers' pockets and shovelling it into companies which need permanent support is no prescription for a viable economic future.
We must treat with care the quotations of the right hon. Member for Bristol, South-East (Mr. Benn). One such quotation—I understand it came from a speech he made in a debate during an earlier U.C.S. crisis—in a newspaper yesterday declared:
There is a limit beyond which the Government—any government—would not concentrate resources on something that turns out to be unworkable.
When something turns out to be unworkable, be it Rolls-Royce in its previous form or U.C.S., and must go to the wall, that creates a deplorably bad impression both at home and abroad, and people are bound to wonder whether our industry is not collapsing. This is the price we have to pay when something is proved to be unworkable.
U.C.S. is like a cat which has nine lives and has exhausted them all. It is vital to the nation and to Scotland that the men whose resources are employed in this disastrous concern should not be wasted. They should be put to work in something from which the country as well as the men themselves have a chance to benefit.

5.46 p.m.

Mr. Brace Millan: It is a commentary on the debate that we so far had from the Government side of the House only one Scottish participant. We have now had contributions from two English hon. Members. One does not wish to object on nationalistic grounds, but one must comment on the remarkable lack of interest which Scottish Conservative hon. Members are

showing in the debate. It is scandalous that on an issue like this, which is so damaging to the Scottish economy, they are not only not participating but have not even had the courtesy to attend to listen to the debate.
However disagreeable one finds the views of the hon. Member for Glasgow, Hillhead (Mr. Galbraith) on matters relating to the shipbuilding industry, he shows an interest in the subject and, while he obviously wishes to see the eventual collapse of U.C.S., he at least has the courage to stand up and state his views.
The hon. Member for the Cities of London and Westminster (Mr. Tugendhat) gave no indication that he knew anything about U.C.S. It is basic to our case that it is completely incorrect—indeed, there has been no evidence to support the proposition—to say that there was no hope for U.C.S., that the situation was beyond recall and that the company under its present structure was unworkable. My right hon. Friend the Member for Bristol, South-East (Mr. Benn), in a brilliant speech, explained that the company was going into liquidation at the very time when its prospects were turning very much for the better and when there were real hopes of viability.
Another deficiency in the speech of the hon. Member for the Cities of London and Westminster was his lack of comment about U.C.S. in the context of either British shipbuilding as a whole or of world shipbuilding. This was also a deficiency in the Secretary of State's remarks. As my right hon. Friend the Member for Bristol, South-East pointed out, and as the hon. Member for Belfast, East (Mr. McMaster) said yesterday, many other shipbuilding nations are facing similar difficulties. Governments which are by no means of a Socialist complexion feel that their shipbuilding industries should be supported during their present difficulties because, in the long-term, they can be viable and offer good prospects. The present Government seems to have taken the view, unlike other Governments faced with similar problems, that they will not support the British shipbuilding industry through its present difficulties. That is the basic complaint which we make about the Government with regard to shipbuilding as a whole and in their disastrous application


of that particular policy to the LLCS, situation.
It is not true that the Labour Government took the attitude that any amount of public money should be poured into the industry, whether LLCS, or any other firm, regardless of the situation within the companies concerned and regardless of the long-term viability of the industry. The Labour Government were supporting the Geddes proposition that with reconstruction, reorganisation, better management, better industrial relations and the necessary infusion of capital, the shipbuilding industry could succeed and could be an important contributor to the industrial strength of Britain. It was on that basis that the Geddes Committee reported, that the 1967 Act was put into operation and that the various schemes of support introduced by the Labour Government were implemented. Looking at the whole situation we see that a great deal has been achieved since the 1967 Act. It is a pity that not enough has been achieved sufficiently quickly to overcome all the difficulties we now face.
The second strand in the Minister's argument yesterday—he was proved so devastatingly wrong in this by the fact that he gave a misquotation—was that in any case the Labour Party would have allowed U.C.S. to go to the wall if we had been the Government at present. That is not true. In any case, it is incompatible with the argument of the right hon. Gentleman that the Labour Government were willing to put unlimited amounts into the industry regardless of viability. We were willing to give every support to U.C.S. and any other shipbuilding firm which was in difficulties provided that there were real prospects of viability in the longer term. At the time of the last infusion of Government assistance to U.C.S., we believed—we believe even more so now—that U.C.S. had a viable long-term future. We are supported in that belief by the very capable management which U.C.S. has at present.
I turn to the facts about the situation as it has developed over the last 12 or 18 months. The Minister made no attempt to answer the points made yesterday and today about the improved productivity record of U.C.S. over the last 18 months. The facts are on the record and have not been disputed by the Government or

by anyone else. The Minister did not dispute the point made earlier by the right hon. Member for Orkney and Shetland (Mr. Grimond) that the real loss-makers for U.C.S. were contracts taken a number of years ago at fixed prices, that they were running out and that we were now moving into a situation in which the company was starting to produce very rapidly a new type of ship specially designed on a standardised basis on contracts taken at a price which would give an economic return to the company. The Minister did not dispute the tremendous improvements in labour productivity over the last year or two, nor the fact that there has been a run-down in the labour force over the last 15 months of no less than 25 per cent. That was done with the full co-operation of the trade unions concerned.
Some rather ill-advised comments have been made by hon. Gentlemen opposite about the trade union attitude. The trade unions have co-operated very well indeed with management over the last 15 months or so in that massive reduction in the labour force. It was a very courageous thing for them to do, especially with the Clydeside unemployment situation, about which we on this side of the House feel so strongly and bitterly.
The situation was improving, but we know from the management's statement that up to the present the situation had not improved to an extent which would have allowed the company to move out of its financial difficulties completely. But we are entitled to have from the Minister a clearer statement than we have had so far about what it was that Mr. Hepper said to the Secretary of Slate for Trade and Industry about the viability of the company. There is a direct conflict between what the Minister has said and what my right hon. Friend said this afternoon was his information about what Mr. Hepper said to the Minister on Sunday last.
This afternoon the Minister was talking about a rather different thing from what we on this side of the House, at least up to this point, have considered to be the question of viability. We all know that Upper Clyde Shipbuilders has been running at a loss and that the losses have been coming down very considerably. The figures must be available to


the Government, and the Secretary of State for Scotland is under an obligation to give them to the House.
What I had understood to be the point about viability was at what point these losses would stop and the company begin to get itself on an economic basis and start making profits to pay back some of the losses of the past. That was my understanding of what viability meant. But the Minister seemed to have a different idea about it. He did not use the expression "profits and losses" in the statement he made yesterday nor in what he said today. This is not simply a technical point. Among other things, the Minister is a chartered accountant, and he used his words with extreme care in what he said yesterday and more explicitly today when he challenged my right hon. Friend and asked him whether he seriously suggested that the company would be in a position to make sufficient profits by March, 1972, to pay off the £4 million or £5 million deficiency which the company had told him it would have by August of this year.
That is an entirely different thing—the use of the terms "excess assets over liabilities" or "excess liabilities over assets"—it is entirely different from the understanding that we had and on which I understood that Mr. Hepper was willing to give assurances to the Government that losses would cease and the company would begin to make profits.
The important consideration is that the losses should cease reasonably quickly and that the company should begin to make profits. It is utterly unreasonable for the Government to say that not only should the losses cease but they should cease so quickly and the profits should be built up so rapidly that the deficiency which the company was presenting to the Minister last week should be paid off within two or three months.
That would mean going from a situation in which one was admittedly making very substantial losses to a situation in which one was making very substantial profits very rapidly. That is what the Minister had in mind and that is why there is this conflict between what he said yesterday and what Mr. Hepper gave my right hon. Friend to understand was the conversation that he had with the Minister at the weekend. They were talking about different things. But all the

Press this morning, I think without exception, have assumed that when Mr. Hepper was unable to give this assurance to the right hon. Gentleman, what he was saying was that he could give no date on which the company could move from a loss-making to a profit-making basis. If the information that we on this side have is correct, that is not so. The management of U.C.S. were able to give a date, and one which was reasonably soon, at which that situation would arise. It would have been irresponsible to attempt to give a date on which these profits would accumulate enough to wipe off the kind of deficiency from which the company was asking the Government to rescue them in the approach which it made last week.

Mr. T. H, H, Skeet: I wonder whether the hon. Gentleman takes into account that loan stock becomes repayable from 1973 and that there is a possible action against the company by Cunard for the late delivery of the Queen Elizabeth II?

Mr. Millan: I am taking all these things into account. With respect, the Secretary of State for Scotland should answer this point and not leave it to the hon. Gentleman. These are important points. We ought to have an answer about them.
The main argument from the Government side, made especially by the hon. Member for Cities of London and Westminster, is that there was absolutely no hope for the viability of the company. That is not my understanding of the situation and this important matter ought to be cleared up.
I turn to the question whether the Government were, or should have been, informed. It is incredible that the Secretary of State should pretend that it was only last week that he discovered or was properly informed of the serious situation the company was in. If that is what in fact happened, not only the company but also his departmental officials are at fault and he as a Minister is grossly at fault. Even from the record of the last few months' events which the Secretary of Stale read out to us we can see immediately that he must be at fault.
The Secretary of State told us that in October, 1970 the S.I.B. director reported to the Government through the S.I.B.


that the company was in a serious financial position. He said that between November, 1970 and February, 1971 he stopped the guarantees on his own initiative. Incidentally, the Secretary of State under the Act, in giving guarantees, acts on recommendations of the S.I.B. and does not act directly. Whether on the Board's recommendations or not, the Secretary of State said that without any kind of public announcement he stopped giving guarantees in respect of ships being built by U.C.S.
The Secretary of State made a statement on 11th February on the question of capital reconstruction of U.C.S. When he was asked four weeks later to explain what the statement meant and to say if the capital reconstruction had been worked out, the right hon. Gentleman could not do so. He was asked a month after that, again, if he could give details of the capital reconstruction. He still could not do so. On Second Reading of the Shipbuilding Industry Bill on 22nd April I asked the Minister who wound up the debate whether he would clarify the position with regard to U.C.S., but we had no clarification from the Government about capital reconstruction.
That was fundamental to the continued financial viability of the company. All this was taking place between 11th February and yesterday's announcement. To put it at its mildest, it is grossly misleading to pretend that in this situation the Government did not know, and were not concerned with, what was going on. There was the scare at the time of the recent Cunard claim. There were substantial stories in all the newspapers then. Did not the departmental officials care to inquire what everybody else was inquiring, namely, what was happening at U.C.S.? That was not last February or last November. It was much more recent than that.
Then there was the letter which my right hon. Friend read out and which was written by the company to the Government at the beginning of May pointing out that there was a serious cash position at that time. The Secretary of State has said that the letter was written about something entirely different. My right hon Friend quoted from the letter. Was that

an accurate quotation? If it was, it is impossible for the Secretary of State to say that he and his Department knew nothing about the situation before Wednesday of last week.
Then there was the extraordinary reference made by the Secretary of State yesterday to the speech made by my right hon. Friend in December, 1969. I agree with the right hon. Member for Orkney and Shetland that this is not just the kind of ordinary slip that can be made in any Government Department or by any Minister. We wonder what kind of advice and information is being given to the Secretary of State when he can be supplied on an important and grave statement such as that which he made yesterday with a quotation damaging to the Opposition but which referred not to U.C.S. but to an entirely different company. That is not just a minor slip which may be made by a junior official. It is a very serious matter.
What the Secretary of State has demonstrated to us this afternoon is not that the Government did not know or that they could not have known. All that he has demonstrated, if he is an honest man, as we assume that he is, is that he did not know. It seems that the only document that ever landed on the Secretary of State's desk was the Ridley document. It would seem that that is the document on which he has based on all his policy decisions in the last few days.
The report quoted in The Guardian this morning shows that there has been within the Government Department concerned a very considerable amount of malice towards U.C.S. and everything that it has stood for. For a long time we on this side have suspected that that malice has existed. We know that some hon. Members opposite do not like U.C.S. and that they do not particularly like Clydeside. They do not like Clydeside politically. They do not like the shipbuilding industry in general or U.C.S. in particular.
Now we have it stated in The Guardian this morning in the most inelegant, malicious and disgusting terms that there is within the Department concerned with the industry a document circulating which speaks about the "butchering" of one of our major industrial concerns on Clyde-side which employs very large numbers of people.
Therefore, we cannot accept at face value what the Minister told us this afternoon, unless he is a Minister of appalling incompetence with no grip on what is happening in his Department. That may be the real explanation for what has happened.
The decision has been taken quite regardless of the absolutely disastrous unemployment position existing in the West of Scotland. I would accept as a general proposition, if this were an academic debating society, if we were talking about political principles rather than about a practical proposition, if there were thousands of other jobs available in the West of Scotland, and if there was a company which was taking up large sums of public money with no prospect of viability, that it would not make sense to keep that company going.
Neither leg of that proposition bears serious examination. This is not a company which has no prospect of viability. Even more serious than that, there are no other jobs available. There are about 25 unemployed men in Glasgow and the West of Scotland chasing every vacancy. What good does it do for the hon. Member for Cities of London and Westminster to talk about deploying these men into other jobs? There are no other jobs in the West of Scotland. That is the reality of which the Government have taken no real account in taking this decision to allow U.C.S. to go into liquidation.
This is a Rolls-Royce type of situation. The decision is taken largely out of malice, prejudice and political dogmatism to allow a major company to go to the wall, but the Government have no idea how to pick up the pieces. They will have to pick up the pieces, as even yesterday's statement demonstrates. The Government are delivering a shattering blow not only to U.C.S., but to Clydeside, to the whole of the shipbuilding industry, and to industry as a whole, as they did with Rolls-Royce.
We are committing ourselves to spending every week £¼ million of Government money for a minimum period of eight weeks, which is £2 million. If things go badly, as they may well do, we shall be committed to large sums of money in redundancy and unemployment benefit on top of that. At the end of the day we shall have spent just as much Government money as would have been involved in

putting in £5 million in the first place. All this has been done with damage to the company, to Clydeside, to British industry, and to Britain as a whole.
I do not expect that the Government can allow 7,500 jobs to be lost. The Government say that they will save as many as possible. I hope that the Secretary of State for Scotland, who bears some responsibility for looking after Scottish interests, will give us more information. I understand that he said something last night on television. If the Government have any idea at all about what is to happen to U.C.S., let them give the information to the House and not on television or anywhere else.
I very much hope that, just as the Government were forced to retract and retrace their steps in the Rolls-Royce situation, they will be forced in the U.C.S. situation to retrace their steps and to save the jobs which are at stake. I know from meeting some of the men concerned and from my own general knowledge of workers in the West of Scotland that there is a resentment and bitterness against the Government which I have not known at any time since I entered the House in 1959. This is entirely different from the feeling that existed even between 1959 and 1964. There is a strong feeling of anger that the public was misled in June, 1970, that people are being sold down the river now, and that the Government have no real regard for their interests and no regard for the employment position in Scotland. The people believe that the Government have put political dogma before the real needs of the people of Scotland.
This feeling of resentment and anger will continue and will explode. It will force the Government to ensure that all these jobs are saved. We on this side will do everything in our power to achieve that objective.

6.10 p.m.

Mr. Stanley R. McMaster: I am pleased to follow the spirited speech by the hon. Member for Glasgow, Craigton (Mr. Millan). I have great sympathy with him representing also, as I do, an area of high unemployment where many of the people are employed in heavy industry, particularly in shipbuilding. In this debate on the tragedy of the Upper Clyde, I can understand the feelings on both sides about the 7,500


directly affected and the 20,000 others who will be indirectly affected if the Upper Clyde folds up.
However, so far the debate has touched only the edge of the problem. The right hon. Member for Bristol, South-East (Mr. Benn) spoke with some feeling about the competition that British shipyards face. In many debates during the six years in which the right hon. Gentleman held office between 1964 and 1970 I asked him—in shipbuilding debates and at Question Time—exactly what subsidies were being paid by our foreign competitors. At that time the right hon. Gentleman would not give me a reply. Now that he is in opposition the right hon. Gentleman becomes a recent convert to the theory that Britain must be prepared to match the type of competition which we face abroad.
The plight of the Upper Clyde shipyards is not unique to the Upper Clyde. Swan Hunter and Harland and Wolff have made losses in the past year. There is not a shipyard in the United Kingdom operating at a profit.

Mr. Douglas: If what is happening to U.C.S. had happened to Harland and Wolff, Belfast, would not the Northern Ireland Government have armed themselves—are they not arming themselves—with extensive powers to take the shipbuilding industry in Northern Ireland completely into public ownership?

Mr. McMaster: I accept the point in so far as a substantial sum of public money has been put into Harland and Wolff over the last five years. Harland and Wolff has been a little more fortunate than Upper Clyde, because the greater part of this public money is represented in buildings and plant and machinery. No one visiting Belfast can fail to be impressed by the massive building dock which has been laid down to take ships of up to 1 million tons—five times the size of ships at present being ordered. The fabrication sheds that back that up make up facilities of which we in Northern Ireland are justly proud. Unfortunately, a much smaller proportion of the £20 million to £25 million which has been put into Upper Clyde since 1967 has been reflected in improvement of their building facilities.
Reverting to a matter I mentioned during the question period that followed the Secretary of State's statement yesterday, I want to refer to the type of competition that we are facing throughout the world. There is not a shipbuilding country in the world which does not help its shipbuilding industry. In France there is a subsidy which I believe has been reduced to 10 per cent., but which until a year or two ago was 15 to 16 per cent. That is paid directly to the shipbuilders on every order they obtain. In Italy a somewhat higher subsidy of about 14 per cent. is made available. If the yard is on the Mediterranean the equivalent of a regional subsidy of a further 1 or 2 per cent. is made available by the French Government to French shipyards.
Spain is harder to compare, because the shipbuilding industry there is Government-owned, but Spain is the one country in Europe still prepared to quote fixed-price contracts. Much of the trouble of Upper Clyde and other shipyards in this country is that they have been obliged to quote fixed prices for orders, knowing that they may not be completed for four or five years. In the face of inflation and rapidly-escalating costs of not only wages but steel and other raw materials, they have found it impossible to complete those contracts without incurring losses. The shipbuilders were in an unfavourable position. They either quoted a fixed price or lost the contract simply because our foreign competitors were prepared to quote fixed prices as they were being subsidised.
Although recently France has reduced her direct subsidy, she has written a very complicated clause into her new shipbuilding agreement. If inflation in France is more than 4 per cent. per annum the French Government will give a further subsidy to offset this inflation in cost on the building contract.
In Scandinavia direct assistance has been given to various shipyards. Sweden has recently had to assist the Uddeval-lavarvet yard, a large yard in which the Government have a 50 per cent. holding. The Götaverken yard, a fine yard with a modern conveyor belt system of shipbuilding has also been assisted by the Government. In Denmark the Burmeister and Wain's yard, one of the leading shipyards in the world, has been assisted by


the Government. Many German shipyards have also had bitter experiences in the past two or three years, and there have been wholesale dismissals there. The Government have also given them assistance to offset the losses resulting from the revaluation of the mark. That is the type of assistance being given in Europe to our principal competitors.
Our other main competitor is Japan. The Japanese also help their shipyards, first, as we help our motor car industry, by protection. The Japanese have encouraged the building up of Japanese shipping fleets, and until last year any ship owner who ordered a ship abroad had to pay a 15 per cent. import duty on it. The result was obvious: the Japanese built their ships in Japan. On the strength of their strong home market, they were able to lay down some of the most modern shipyards in the world, behind this protective tariff. We in Britain, completely unhelped by our Government, had to compete with them.
Moreover, the Japanese, because of vertical integration, were able to build ships with steel for which they paid a very special price which, as in Germany, was cheaper for the Japanese shipbuilder than the steel bought by the British shipbuilder. In addition to such assistance given in Japan, and probably also in Spain and other European countries, Germany has been prepared to help her shipbuilding industry by quoting special terms for the price of steel, and by offering special concessions for large bulk purchases.
I should not conclude this part of my speech dealing with our main foreign competitors without mentioning the other shipbuilding countries, because I should like to make this a worldwide survey. The United States protects its shipbuilding industry and subsidises it in a way unrivalled anywhere else. The subsidy there has been 55 per cent.; that is the figure which the Americans estimate reflects as a direct subsidy the difference between shipbuilding costs in Europe and in the United States. It is now being reduced to 30 per cent.
It is also to be noted that unless a United States ship owner builds his ships in the United States he suffers a considerable trading disadvantage. If his ships are to carry cargoes which originated in the United States, the ships must have

been built in the United States. That is an important form of protection used by the United States to ensure that its shipyards shall not go bankrupt.
We cannot obtain information from behind the Iron Curtain. We know only that some Russian ships have recently been sold at very low prices. There is no way of determining how ships built behind the Iron Curtain are costed, but we know that in Russia, as in every other country, it is a matter of Government policy to maintain the shipyards.
In the face of facts like those, I must admit that I am very disappointed that in his opening speech my right hon. Friend the Secretary of State for Trade and Industry did not give more indication of the Government's policy towards the shipbuilding industry. The one little way in which we help our shipyards is by guarantees. Their level was recently extended to £700 million. Unfortunately, the entire £700 million has now been committed, and the figure is totally inadequate. The policy has been in operation for six or seven years, and it has not to date cost the Government a penny, so there is no Government aid or subsidy in it in the proper sense of the words.
The industrial editor of The Times, Mr. Maurice Corina, wrote on page 19 today:
An indication of the Government's ideas is expected to be given today during the emergency debate on the UCS liquidation.
I think that the author of that article has his finger on the pulse of the country as a whole and of the House. Hon. Members did expect some indication to be given to the House today of the Government's policy towards the shipbuilding industry as a whole. It is not sufficient to deal piecemeal with problems such as the one that has occurred within the past seven days.
It is vital to the United Kingdom that we maintain our shipbuilding industry, first, for defence reasons, because we have one of the largest Merchant Marines in the world. If our merchant ships operate around the world, they must be repaired in British yards and in case of emergency should be protected by the Royal Navy. It is to the British shipyards that we look for our ships for the Royal Navy. Second, and equally important for trade reasons, our ships carry most of our trade


both to and from the United Kingdom. If we had no shipbuilding industry or no shipping industry the cost to our balance of payments would be substantial. Third, we build ships not only for British ship owners but for other ship owners throughout the world. The construction of ships is one of the United Kingdom's valuable export industries.
On the figures that I have already quoted, our shipbuilding industry could easily collapse entirely. If foreigners are to be subsidised while Swan Hunter and every other British yard loses money, all our yards will go out of business in time unless the Government are prepared to face up to the situation. Here I speak also of the last Labour Government, who have been out of office for only one year. They had six years and dealt with the matter in an equally piecemeal way. They did not provide any firm policy for our shipbuilding industry. The right hon. Member for Bristol, South-East had six years in which to match the tide of competition from abroad. The only policy introduced was the guarantee.

Mr. Douglas: The hon. Gentleman stretches the credulity of the House when he suggests that the former Labour Government did nothing. The whole structure of the Shipbuilding Industry Board was ours. The assistance given through the industrial Expansion Act was ours. The further assistance that we could have given through the Industrial Reorganisation Corporation was ours. On each of these, the hon. Gentleman voted for the destruction of devices that could now be used to give further assistance to the shipbuilding industry.

Mr. McMaster: I repeat that the problems of the industry cannot be dealt with piecemeal. Certain capital sums were made available to various shipyards as a result of the Geddes Committee's proposals. They were designed to rationalise our shipbuilding industry and put it on its feet. But something more permanent and more carefully thought out is required.

Mr. Tom Boardman: I should also remind my hon. Friend of the Labour Government's investment grants system—

Mr. Douglas: They still have it in Northern Ireland.

Mr. Boardman: —which enabled ship owners to build ships overseas and receive grants from British taxpayers for so doing.

Mr. McMaster: I listened with interest to the speech of my hon. Friend the Member for Leicester, South-West (Mr. Tom Boardman). While following his argument, I cannot accept his main statement that it is unsatisfactory that the industry should be continually propped up.
This industry must be helped, just as the motor car industry is helped by protection. The shipbuilding industry is in a different position from other industries. It is not protected; it receives neither tariff protection nor direct subsidy. While we face the type of competition that we are facing from abroad it is the duty of the Government, in the interests of the nation to study the help given abroad, to attempt to quantify it, as has been done in the United States, and to fix a figure which will put our shipyards on an equal footing with foreign competitors.
The Government should take this action first for defence reasons, secondly for trading reasons, and thirdly because of the invisible earnings of our shipping industry. British shipping contributes to our balance of payments with substantial invisible earnings. If Britain is not to support its shipyards and shipping industry properly, then she will have to spend valuable foreign currency on ships bought from abroad. We would suffer a deficit. When ships are built in this country, I would remind my hon. Friend, the profit on the income earned is taxed here and this reduces the cost. If a ship is bought abroad the gross sum spent on the vessel is lost. This must be taken into account in balancing the value of our shipping industry to this country.
The problems of Upper Clyde have been accentuated by recent wage rates and much play has been made by hon. Gentlemen on both sides on this point. I have always been a firm believer in steadily increasing wage rates: wages must improve along with the increase in the gross national product and the increasing prosperity of the country. They must increase at the same rate as wages are increasing throughout the world. This


must be balanced by an increase in productivity. I am afraid, however, from my knowledge of Upper Clyde, that wage rates have increased more rapidly than productivity. I was sorry to hear the hon. Member for Bristol, South-East boast of the fact that the tonnage produced on the Upper Clyde has increased dramatically and say that it was better for this country to build more large container-type vessels such as tankers and other bulk carriers than smaller, specialised vessels.
I have visited Connell's yard on the Clyde and I was very impressed at the smaller but very much more expensive and profitable specialised vessels produced in that yard—mixed bulk carriers to carry mixed cargoes of grain and liquid. It is better for this country to specialise in the more expensive type of vessel rather than to concentrate on increasing tonnage. There is greater profit, greater scope for our technology, in producing this specialised, expensive type of ship rather than larger empty hulls. Some of the figures quoted during this debate have tended to cloud the issue. The main point is that with rising wage rates in the shipbuilding industry, in common with other industries—and wage rates must rise if shipbuilding is to attract the right kind of person to maintain its position as one of our leading, vital industries—then productivity must increase as rapidly as elsewhere in the economy.
The Government should study the assistance which has been given abroad and make subsidies available to British shipbuilders directly related to those given abroad. I am not a great believer in subsidies, but while they are being paid by other countries they ought to be paid by this Government. At the same time, the Government can work internationally for an all-round reduction in subsidies. It seems rather pointless one nation fighting another, increasing the subsidies. The Americans were recently up to 55 per cent. The people who benefit from this are not the Upper Clyde Shipbuilders or other shipyards—they go into bankruptcy as a result. The people who benefit are those countries who trade in these subsidised vessels, who do not have a merchant marine of their own. They are being subsidised by the shipbuilding countries. This country cannot afford to wear a

white sheet and to set an example of non-subsidy, hoping that other countries will follow suit. While our main competitors are subsidising their shipbuilding industries, we must do the same and work for a step by step reduction of subsidies. When the other countries have reduced their subsidies we will reduce ours.
Perhaps the Secretary of State for Scotland, in winding up, will define terms such as "viable" and "profit-earning". What does "viable" mean in this context, particularly in the context of subsidised international competition? What does "profit-earning" mean in relation to this industry which has no protection? Secondly, will he deal with the overall policy for British shipbuilding? Will he say a few words about the Government's future plans?
It is totally unsatisfactory that the problems should be dealt with piecemeal by successive governments, on an ad hoc basis, as the need arises. We must have some overall policy so that not only will the shipyards be able to raise the capital they need on the ordinary market but so that they will be able to guarantee their future, They must be able to get the recruits they need, particularly the university graduates, who will be so vital to the industry's future. These things will maintain the morale of those employed in the industry.

Mr. Speaker: I know that about a dozen hon. Members want to catch my eye in this debate. The last two speeches have taken, between them, a total of 52 minutes. At that rate many Members who wish to speak will be squeezed out.

6.38 p.m.

Mr. William Small: The hon. Member for Belfast, East (Mr. McMaster) is as anxious as anyone to obtain Government assistance for his constituency. He talks about raising the ante to £700 million, and, like an Irishman, talks about one door opening and two others closing.
I live within the environment of this industry and I do not like to hear people talking about jobs. On the river this is a way of life. The boys during the war were not recruited in the City of Westminster, they came from the river. I This country cannot afford to wear a


termed "Yesterday's Workers"— 2,500 men.
We must get the record straight. From 1950 to 1960 the take-over boys, the Charles Clores and the rest, ran this country; they were the "faceless men". Shipbuilding was not exceptional among Britain's failing industries. There were economies of scale in the yards, and lubricating machinery was offered to help these things come about.
Fairfield under private enterprise failed before the Geddes Report came out, and there was a rescue operation. The amazing thing about all this in political terms is the change of attitude, and the co-operation of the trade union movement is an example to the community. People came from all over the world to see the Fairfield experiment, but where were all the shipbuilders? Did they come up the Clyde to support the Fairfield experiment? Not on your nelly! It was a dangerous germ of an idea. There is no progress without friction.
My colleagues who have come down from the Clyde do not come here as beggars; they come for the right to work. I know something about the dignity of labour, and the Government had better take a good look at the road they are travelling. The men who will be coming down tomorrow in their hundreds are fighting for their lives.
A week ago I opened the Yarrow training school, so I have a real understanding of the industry. Nevertheless, I am a politician by conviction. Parents make sacrifices so that their children can become craftsmen. Having become craftsmen, they have a right to work. In the old days when one went to the labour exchange for a job there was the "non-genuinely seeking work clause", but that does not operate when there is no work to be had, and we are fast getting into that position. The Government should be seen to govern, and I ask the right hon. Gentleman, when the three wise men bring in their economic portfolio at the end of the day, to see that there are no redundancies. There can never be a demarcation dispute on empty bellies, and the sooner we get them filled the better.

6.44 p.m.

Mr. T. H. H. Skeet: I listened with a great deal of interest to

the spirit behind the speech of the hon. Member for Glasgow, Scotstoun (Mr. Small). It is true that one cannot have a demarcation dispute on an empty stomach. Over the years the shipyards have had managerial and labour problems. Labour in recent years has done its best to put things right but, unfortunately, some of the problems go back over many years. The Shipbuilding Industry Board Annual Report to 31st March, 1970, said:
In 1969, however, the performance of the industry did not demonstrate an improvement in the relationship of management and labour: there was a marked increase in both the number of stoppages and the total man-hours lost as compared with 1968.
This is a tragedy for any industry which is on the way down.
The former Minister of Employment and Productivity in the Labour Government referred the industry to the C.I.R. for examination. I understand that the report when it came out was a confidential document, but a certain amount reached the newspapers. The people who were lambasted were management for not taking advantage of opportunities, and the Amalgamated Society of Boilermakers clinging to sectional interests, for separateness and also for being the strongest divisive factor in the industry. The C.I.R. recommended that something should be done to rationalise the whole process.
It is of great anxiety to me to see one of the oldest industries in the United Kingdom, which used to contribute about 48 per cent. of all the ships built, now dwarfed down to producing approximately 6½ per cent.
The crucial test is: can we look ahead in the future not to a recurrence of the difficulties that we have experienced in the past but to profit-making? When my right hon. Friend said yesterday that the total liabilities were about £9 million he was being conservative. I have since had an opportunity of reading the Evening Standard, in which the total liabilities are given as about £28 million. With a liability of that nature, a prospective claim against the company for late delivery, difficulty with the competition of ships—some of which may not be built—a legacy of fixed interest contracts, which I dare say will come under the umbrella of the £28 million, can the right hon.


Member for Bristol, South-East (Mr. Benn) say that this is a viable entity? This is the acid test.
If it appears that this is not one incident but the culmination of a long period in which U.C.S. has asked for additional sums from the public purse and secured them, in which it has made promises which it has failed to keep, this suggests that management has not had a grip on the situation, and my right hon. Friend is right in suggesting that the company should go into liquidation and that there should be a reconstruction.

Mr. Douglas: The hon. Member has the advantage of having read the Evening Standard, but I draw his attention to the fact that the liquidator will be asking the Government for £3 million. Will the hon. Gentleman press his right hon. Friend to say whether or not that £3 million will be granted?

Mr. Skeet: That is not particularly helpful to the U.C.S. for the simple reason that £2 million or £3 million is nothing compared with the total liabilities of £28 million—nor is £6 million. What my right hon. Friend has to decide is the viability of this branch of the industry, particularly when firms further down the Clyde are a little more successful. Swan Hunter has been a little more successful than U.C.S. According to the Financial Times this morning, the loss by Swan Hunter is not as substantial as would have appeared. Swan Hunter has not received from the Government the aid which U.C.S. has had.
I have listened to the arguments of my hon. Friend the Member for Belfast, East (Mr. McMaster) about the subsidies which should be granted to the shipbuilding industry, but the dispositions from the Government over the years all seem to have gone into U.C.S. and to the undertaking in Northern Ireland. Little has gone to the other companies which have to face the world situation.
We have a common market in the shipbuilding industry. There are no tariffs between us and continental countries. What my right hon. Friend has to do is to pick good management. If he does that he will have the right structure. The first thing the right hon. Member for Bristol, South-East did was to fly all round the country consulting shop

stewards. The initial mistake was his in putting in the wrong team.
The U.C.S. has been hindered by inflation. Steel prices have crept up at least four times during the last two years. Steel enters the price to the extent of 18 per cent. with a large ship, rising to 26 per cent. with a tanker; wage costs involve about 25 per cent.; and these two factors are responsible for some of the difficulties.
It was a matter of concern to me when the "Jervis Bay" was towed out of the Clyde and sent to Western Germany for completion, and when the possibility of a Norwegian order was lost because the unions were arguing amongst themselves about what remuneration should be paid. This should not happen.

Mr. Douglas: Which century is that?

Mr. Skeet: This is not in the last century; it is current. Although output per man may have improved during the last 18 months, this has not been the trend over recent years. If the workers appreciated the difficulties we should be a long way towards solving our problem.
I realise that my right hon. Friend tried to make an investigation earlier and demanded information which was not forthcoming. Only last week was he told that the company was in imminent danger, and he has had only a few days in which to make contingency plans. Remember, a number of problem boys from the Labour Party have now come on to his desk for solution. We have to provide the solutions; they provide the mistakes. I do not like to see any man unemployed. A man is not well off if he is picking up unemployment benefit. This means misery and unused talent. I ask my right hon. Friend to come to the House as early as possible with his plans for reconstruction. Will he make known exactly how many people will be displaced and put forward proposals to cover the others?
I regret that the Chevron refinery did not come to the Clyde as it would have absorbed 132 men, though I am not suggesting that they would have come from the shipyards. I hope that people who might be dispossessed will be able to go into the Lower Clyde or be utilised elsewhere in the country. I am certain that, if the U.C.S. is to be successful,


it should be involved in the tanker building business, as this is where there will be expansion in the future. It may be that other people have different ideas, but I merely make the suggestion. It is unfortunate that this situation will encourage unemployment, but the seeds of this matter go back to the Labour Government which make a mistake in judgment in backing a deal that was bad from the start.

6.55 p.m.

Mr. William Hamilton: It is not without interest to the House and to Scotland that the only Tory Member from Scotland who has taken part in this debate made his contribution and then disappeared. We have now had from the Government side of the House four speeches on a Scottish shipbuilding problem from the Cities of London and Westminster, Leicester, Bedford and Belfast. The hon. Member for Belfast, East (Mr. McMaster) said that he was against subsidies. It is astonishing that such a statement should come from that hon. Member when Northern Ireland is propped up by taxpayers here in the form of various subsidies.

Mr. McMaster: rose—

Mr. Hamilton: I have not finished with the hon. Member yet. He made the kind of speech which I have heard him make so often, and yet he goes into the Government Lobby to vote against a policy that he ought to support. What we are asking for, not only in the name of sound economics but in the name of humanity, about which the Secretary of State knows very little, is a sum of £6 million.
It is interesting that during four hours of debate there have been only four Scottish Tory Members in the House. That is a sign of the importance they attach to this debate. That is why they have only a handful of Members in this House, and that is why they will have a damned sight less when the election comes.
I wonder why the hon. Member for Glasgow, Cathcart (Mr. Edward Taylor) does not break with convention and speak in this debate. We know that he is a junior Minister, and I suppose he feels that he has no responsibility in this matter. He is on record when in Opposition

as saying that money should be poured in to save U.C.S. Will he go into the Government Lobby this evening, will he come with us into the Opposition Lobby, or will he resign? Who the hell cares what he does, but Cathcart will tell him what it thinks as soon as he faces the electorate at the polls.
This debate relates to a political issue. It is a rescue operation for the Secretary of State for Trade and Industry and for the Prime Minister. The Prime Minister is desperately anxious to prove his virility by being tough. He appointed the right hon. Gentleman as Secretary of State to be a "hatchet man" par excellence and also appointed two or three minions as probationary "hatchet men".
The hon. Member for Cirescester and Tewkesbury (Mr. Ridley) produced his plan for the demolition of this company before he was appointed a Minister. The very first speech by the right hon. Gentleman from the Government Dispatch Box dealt with lame ducks and, to be consistent, he has had to make the same kind of noises both yesterday and today. I met the Minister in other circumstances before he came to this House and I thought that he was a cultivated, civilised and gentle man. By heavens, we certainly see a difference now. His behaviour at that Box and the policies that he is pursuing on behalf of the Government will result in the greatest tragedy for a century for Scotland and for Britain as a whole.
It is no good the right hon. Gentleman or the Government as a whole saying that their whole economic policy must be based only on the criterion of profitability. This is what the right hon. Gentleman, so far as he has a philosophy at all, has continually propounded at the Dispatch Box. That is why he came along to the House yesterday and misquoted my right hon. Friend. And he has not heard the last of that matter. I do not know where he got that quotation. Was it in his brief, and was the brief provided by the Tory Central Office or by the Civil Service? If it was the latter, then some disciplinary action should be taken. If the former, then the right hon. Gentleman is under considerable pressure to resign. The apology he gave this afternoon was less than gracious. We want to hear a lot more


about the matter. If he is able to misquote in the way he did, he could equally misquote the timetable that he seeks to lay before the House.
Many of us find it incredible that a Government, with a 49 per cent. share in a company, did not know what was going on until last week. I do not believe it, and I do not believe that anybody in Scotland believes it. The Department for Trade and Industry is the most incompetent, inefficient, dogmatic and dishonest part of the Government. And that is saying something. We have only to remember the Pinnock affair, Rolls-Royce, V and G because in in each case they have proved to be dishonest, deceptive or not telling the whole truth to the House. Does the right hon. Gentleman deny any of that?

Mr. John Davies: Every word of it.

Mr. Hamilton: That is just what I wanted to hear. The right hon. Gentleman is saying that every word he has said is honest, that every action he has taken is honourable and that he has taken no step to deceive this House on the V. & G. matter or in regard to Rolls-Royce. We can prove the contrary.
Today we are concerned not with the incompetence or even dishonesty or inefficiency of the right hon. Gentleman's Department. We are concerned with jobs on Clydeside. We want from the Government some guarantee of security for those men. The hon. Member for Glasgow, Hillhead (Mr. Galbraith) spoke of wage-earners pricing themselves out of jobs. I have with me the Daily Record, which in Scotland is the equivalent of the Daily Mirror. Yesterday it carried a story about a young man called George Smith. The story read:
The young couple were looking forward to a bright future, having moved into a comfortable new home. But now the problems which threaten the company have thrown a dark shadow over their lives. Prospects of another job for George are not good. He must seek unskilled work at a low wage, or he must emigrate.
We heard a lot about emigration when we were in Government. By God, if this matter goes through and these jobs are lost the emigration figures will soar. The story also says that George's basic wage was £23 a week and that with overtime he can take home more. These are the

men whom the Government say are responsible for the cost-inflation with which we are now afflicted. They are not highly-paid men; they have done their job towards increased productivity. This is happening at the very moment when this company might well be on the verge of profitability.
The right hon. Gentleman tried his best to denigrate the management and the men in an attempt to justify the hatchet job on which he is now engaged. As was said by the right hon. Member for Orkney and Shetland (Mr. Grimond), the result of his ill-thought-out policy is to get the worst of all worlds. We do not know where we are going from here. There is a degree of uncertainty and disillusionment that has not been experienced in Scotland for years.
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) mentioned the overall assessment of the situation. If we look at the round figure of 30,000 jobs or thereabouts which are now in jeopardy, if we examine the figure of socia security benefit for which those men would have to apply and would get, and if we take account of the income tax lost to the Revenue we shall find that the sums involved amount to at least £1 million a week. Five weeks of such treatment and the sum involved would be equivalent to what U.C.S. is asking for now to save these jobs.

Mr. Kenneth Lewis: Who says they are going to lose their jobs?

Mr. Hamilton: That is what we want to know, silly man. That is why the men are coming down here, because they do not know where they are with this Government. Come to that, the Government do not know where they are. That is why the right hon. Gentleman made such a short speech. He thought the shorter the speech the better, and he may be right about that. The Prime Minister is the man to blame. He put the hatchet man there, God forgive him. But the Government as a whole must accept responsibility for what is happening in Scotland for U.C.S. is just as small part of the picture of what is happening in Scotland and in other regions of Britain. The Government do not know where they are going. We do—and the sooner the better.

7.7 p.m.

Mr. John Biffen: A short while ago the hon. Member for Glasgow, Scotstoun (Mr. Small) said he spoke for himself as representing a traditional way of life on the waterside. It was a moving speech to many of us who are not blessed to come from Scottish constituencies. I know that includes me, but I do not know whether to include the hon. Member for Fife, West (Mr. William Hamilton), who does his best as an Englishman gone north. Many of us come from a variety of backgrounds with strong traditional links. I have links with agriculture which are as strong as those that bind the hon. Member for Scotstoun to shipbuilding. The regrettable fact is that, although the hon. Gentleman may reflect his background traditions in shipbuilding, as I do in respect of agriculture, there is no such thing in. this world as preserving a way of life.
If I needed authentication of that observation, I have only to look at this morning's report from U.C.S., which says that over the last 15 months it has reduced the labour force by 25 per cent. It is part of the dilemma of politicians that we are always being beckoned by the mirage that somehow or other we can devise the right size of industry in the right locations, with the right mix of goods. This probably is more true of shipbuilding than of most other industries. Not many years ago our shipyards accounted for about 48 per cent. of total world tonnage launched. We have seen a rapid diminution of that share.
Therefore, it is natural that we should try to preserve the pattern of shipbuilding, and it was perhaps reached in its most developed sense by my hon. Friend the Member for Belfast, East (Mr. McMaster), who not only knew roughly where ships ought to be made, but said that it was better for this country to concentrate upon the specialised type of ship. This was in the argument whether Upper Clyde had got the correct order book.
I say in all humility that I try to be a professional politician, but I am daunted at the prospect of trying to devise the right size of shipbuilding industry, where it should proceed, and with what mix of orders.
The dilemma which confronted my right hon. Friend—indeed, it has confronted

previous Governments—was how best we could moderate trends going outside this country which could not be reversed by unilateral action from within. None the less, we could try to mitigate the untrammelled operating of market forces by such social considerations as we are able to bring to bear. We might seriously question whether we have had good value for money in that direction. That is one reflection which we should be making upon this subject.
I am worried about the channels of communication between the Government and Upper Clyde Shipbuilders. This is no reflection on my right hon. Friend; it is a reflection upon what this House in its wisdom has sought to do over recent years through legislation. There is a temptation to go for the middle way in politics. That is one of the most fatal temptations to which politicians can succumb. The middle way is to have some kind of mix of public ownership which does not carry the full stigma of nationalisation nor the rigours of free enterprise. In a sense, this would be a wide-ranging variation of the B.P. theme where there is State involvement in the equity of a company, but somehow we want to keep it as far removed from the day-to-day activities of Whitehall as possible. I can understand the anxiety of many people—I share these anxieties rather less than many others—about day-to-day political supervision where money is voted by the taxpayer. None the less, we have sought to establish an elaborate mechanism which, on the one hand, would provide public funds, but, on the other hand, would keep at arm's length direct ministerial responsibility.
I am not happy about the way that the public sector investment in U.C.S. seems to have had to proceed through the S.I.B. and its representative on the Board. I do not accept in any sense that it is a censure on Mr. Mackenzie or upon my right hon. Friend that the communication between them is as it has been. That it is unsatisfactory must now be evident to the entire House. But I believe that they were both operating within the framework which this House decided in its legislation. [Interruption.] This is the kind of issue which should emerge from the debate.

Mr. William Hamilton: From a Select Committee.

Mr. Biffen: If the hon. Member for Fife, West, who we know is interested in committees of one kind and another, wishes to add to the list by having a Select Committee, I note his enthusiasm.
This problem goes far beyond the question of U.C.S. It concerns the extent to which accountability is sought for public funds and the extent to which a Minister may feel that he is correctly appraised of what is being done by those who, in the first resort, will turn to him as banker. I am far from happy about the situation that has been revealed in that respect.
I should now like to reflect on what may happen in the immediate and medium future. The first reflection which I make under this consideration is that I am a little less impressed than I used to be about the so-called economies of scale. I am glad to observe that the hon. and learned Member for Montgomery (Mr. Hooson), a Liberal Member, agrees with me on this point, because I am going on to conclude from that that one of the most fallacious arguments being advanced in the current debate about the Common Market is the supposed advantages from economies of scale. Again, I am glad to observe the support of the representative of the Liberal Party in this respect. May his scepticism infect his five fellow Liberals, because they may have a valuable rôle to play in the coming months.

On the question whether U.C.S. was on the verge of profitability, we had the benefit of the doubtless judiciously considered commercial opinion of the hon. Member for Fife, West that that was the position. If so, I do not think that the conventional financial institutions would believe that U.C.S. was the victim of a sustained vendetta being carried out by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) and would therefore have been deterred from advancing funds. There is a marked reluctance of the market to provide capital because, for one reason or another, it does not believe that this organisation has the commercial viability which certain interested politicians proclaim. The market will not supply money for shipbuilding if it thinks that political leverage will do the job for it. Political leverage is precisely what a number of

hon. Gentlemen opposite seem to be trying to apply. I wonder whether in the long term it is in the best interests of any industry, and, above all, its employees, to become isolated from the more commercial forms of operation and to become permanently dependent upon—

Mr. Douglas: Including farming?

Mr. Biffen: I include farming within that heading. I should be happy for the hon. Member for East Stirlingshire (Mr. Douglas) to come to North Shropshire to debate this matter with me at any time. I wonder whether it is in the best interests of such industries to perpetuate a dependence on politically motivated decisions. Our history does not indicate that employees benefit best from these circumstances.
I turn now to what will happen. The House should not be under any illusion that we are seeing a major act of Government withdrawal. On the contrary, I think that we are seeing my right hon. Friend make an attempt to find a more suitable structure than that which now persists for shipbuilding on the Upper Clyde. I shall view the development of that ambition and that undertaking with a great deal of interest, because I have not been overwhelmingly impressed by the manner in which the Government got themselves involved in the Rolls-Royce affair. But I am, as ever, faithful, charitable and hopeful, and I believe that lessons have been learned from Rolls-Royce.

Mr. Benn: rose—

Mr. Biffen: No, this is my last sentence.
I shall be interested to see how the Government proceed with the objectives which they have set themselves for the reorganisation of shipbuilding on the Upper Clyde. As the right hon. Member for Orkney and Shetland (Mr. Grimond) said yesterday, this consortium has been ill-starred, and we must be sure, because we owe it to the workers on Clydeside, that anything that replaces it has a far better chance of being a viable and commercial success.

7.22 p.m.

Mr. Richard Buchanan: I congratulate the hon. Member for Oswestry (Mr. Biffen) on his


ingenuity in getting in that plug against the Common Market during a debate on Upper Clyde Shipbuilders. I re-echo the sentiment, expressed by many of my hon. Friends, that it is significant that the Government are padding this debate with hon. Members who have some financial knowledge. Apart from the hon. Member for Glasgow, Hillhead (Mr. Galbraith), who has little or no shipbuilding interests in his constituency, no voice has been heard from the other side of the House about what we in Scotland feel about the situation that has developed.
The hon. Member for Oswestry spoke about the Government trying to find a more suitable structure. Let us try being realistic. What they mean by a suitable structure is that the unprofitable element will be cut off. It is no news to anyone that the unprofitable element at the moment is Clydebank, but there is a soft spot in every Scotsman's heart for Clydebank, because it was nearly blitzed off the face of the earth, thanks to its pre-eminence in shipbuilding. That is what the Nazis were after, and it is the sons and grandsons of the people who soldiered on during that period who are being put out of work today.
After the war there were bulging order books to replace the ships that had gone to the bottom of the sea, but management became abysmally slack and this was seen in the falling off of orders. Private enterprise let us down; and a prominent Tory Prime Minister did not help the situation at all by saying that they had never had it so good. The trouble was that too many people believed him. When Geddes came along and reported that the shipbuilding industry needed complete reconstruction, U.C.S. was formed. It began with a disastrous inheritance, resulting from a period of Tory indolence and lack of interest.
One or two hon. Members have talked about the "Jervis Bay" being towed away, and about demarcation disputes. As my right hon. Friend the Member for Bristol, South-East (Mr. Benn) said, if someone wants to make craftsmen stand by their lines of demarcation, he should do what the Government are doing now. I think it reflects great credit on the men in charge of U.C.S. that they have broken

through so many lines of demarcation, and that productivity is on the way up.
U.C.S. is geared to the present set-up because work levels in engineering in Glasgow are dangerously low. In the east end of Glasgow, which used to be the powerhouse of industry, there is not one major industry. My constituency of Springburn used to be the powerhouse of the locomotive industry, but there is now not one major industry there. On the river we are destroying the one major industry that exists, and the situation now is worse than it was during the depression years when previous Tory Governments allowed the grass to grow in the yards. Although during those years thousands of people were unemployed, the factories were still there. But the factories have now gone; they are being demolished.
There has been talk about taxpayers' money going down the drain. My right hon. Friend the Member for Bristol, South-East is censured for pouring money into U.C.S., but U.C.S. has justified the faith which the Labour Government had in it. It is quite impossible to take all five yards and make them all profitable at the same time. They took probably the worst one, Fairfields, and made it viable. If anything is hived off, Fairfields is probably the first to go. Productivity is rising, the order books are full, and more orders are coming in. Our faith is being justified.
Last week two reports were published—one by O.E.C.D., and the other by the National Institute—which said that inflation was worse in Britain than anywhere else, that we were making no progress at all, and yet here we are calmly appointing a liquidator to put anything up to 7,000 men on to the employment exchange. I take the right hon. Gentleman's assurance that it will not be the whole 7,000, but how many small firms which depend en shipbuilding and rely on banks for their money, firms which have good managements, will be able to get the necessary cash? Where is the confidence to come from? Does anyone think that banks will keep these small firms going? There will be a flood of bankruptcies because of this decision to put the liquidator into U.C.S.

Mr. Skeet: Will the hon. Gentleman explain where the orders are coming from? Only 21 per cent. of our output goes to exports, compared with 70 per cent. to 80 per cent. elsewhere.

Mr. Buchanan: I could not say where the orders are coming from. I know that the statement that there are £90 million worth of orders on the books, and another £100 million worth of orders in the pipeline, if this money is forthcoming.
In a period of rampant inflation, we are considering putting men on the street and paying them for doing nothing. I do not see how that will help the inflationary trend or how it will help us as a country to climb out of the pit into which a lack of confidence in the Government has put us. The Economist last week criticised the Chancellor of the Exchequer who made a blunder of £1¼ billion in the g.d.p. in his Budget speech. When the six months were half over, he forecast that for the first six months of this year the g.d.p. would be £32·2 billion. In the event, the figure turned out to be £31·7 billion. This has come about because of a drop in demand. We are accentuating this. I forecast this will prove one of the greatest blunders of the Government. It is a blunder born of haplessness and dogmatism. I urge the Government to think again about bringing this consortium into public ownership. Upper Clyde Shipbuilders is pulling itself up by its own bootlaces. It is proving that the faith which we placed in it was justified. Upper Clyde Shipbuilders and the men concerned on the Clyde are only asking for a chance to finish the job.

7.31 p.m.

Mr. Norman Tebbit: It has been a fascinating day. I have found, as so often when Scottish affairs are being discussed, that England might just as well not be part of the United Kingdom. It seems that we are not supposed to be privy to the hopes, the fears or the prospects, good or bad, whatever they be, of Scotland. I happen to believe in a United Kingdom, and I fail to see why it should call for very much comment that English men dare to intrude on this debate.
We have heard some fascinating fables today, of the sort that one imagines progressive co-operative folk frighten the Woodcraft Folk with around the camp fire at night—that there is a Government in existence who think it fun to go around bankrupting prosperous companies, or that there is a sort of witches' coven of bankers who meet sometimes in the City of London and sometimes down

at Cirencester, with no other object than to dismember profitable companies, or that bankers go around the place looking, out of spite, for a company which would be prosperous to which they can deny funds.
These are just fables. If Upper Clyde Shipbuilders was a profitable concern, it would not find this difficulty in raising money. But only today we read in the Evening Standard of the hopes which have been fulfilled, of which the hon. Member for Glasgow, Springburn (Mr. Buchanan) spoke—a £28 million deficit. Was that the hope that he had in mind?
An interesting point was made by the right hon. Member for Bristol, South-East (Mr. Benn)—that other countries subsidise their shipbuilding. That was not the argument with which he came when he was restructuring U.C.S. Then, it was that the structure was wrong and that if it was put right the company would be viable. Now, the story is different—and what is needed is an overall subsidy.
I sometimes find it difficult when looking across at the right hon. Gentleman not to be reminded of Peter Pan who believed in fairies and pirates and would not grow up. J. M. Barrie dealt with his Peter Pan very much better than the Leader of the Opposition has dealt with his. Barrie exiled his to Never-Never Land, while the Leader of the Opposition brought his back from another place to try to bring Never-Never Land here.
A pantomime on the stage is all very well, but pantomime as played by the right hon. Gentleman yesterday goes too far. A Privy Councillor, an ex-Minister of the Crown, hot-footed it up to the Clyde, and, if the Daily Mirror reported him rightly, delivered himself of some interesting views. He was asked whether he agreed with the decision of Clyde workers to take over any yard threatened with closure. He said—at least, this is what the Daily Mirror said he said—
It is for you as workers to decide. In my own view, in the light of what has been said, you should regard it as your yard, and it is absolutely justified in the circumstances in which you find yourselves.
I hope that the Leader of the Opposition will take his impetuous right hon. Friend on one side and have a chat with him. When he says that they should regard it


as their yard, I should have thought that the right hon. Gentleman, above anyone, would have known that 49 per cent. of it belongs, through Her Majesty's Government, to the public—

Hon. Members: To them.

Mr. Tebbit: And not just to those 7,500, but to the other 50 million, too. We have had threats of confiscation of property by the State without any compensation—for example, British United and the Carlisle breweries. But never before have we had a Privy Councillor encouraging criminal industrial anarchy of this kind.
So we come to the prospects for this shipyard. Yesterday, the right hon. Gentleman prattled on gaily about £90 million-worth of orders on the books. He should tell us whether they are like the RB 211 orders, every one at a loss. He crowed about the £100 million-worth more orders in the pipeline. Are these new ships designed, are they priced, are they costed, are they sold? If the orders were taken, would they be delivered on time? These are the points which the right hon. Gentleman knows about.

Mr. Douglas: Ask the Secretary of State.

Mr. Tebbit: Does the right hon. Gentleman still have the confidence that he used to have in a management which gives 48 hours' notice of its inability to pay its wages.

Mr. William Hamilton: What did Rolls-Royce do?

Mr. Tebbit: I have no confidence in that Rolls-Royce management which the right hon. Gentleman set up anyway.
This is a management that, in January, knowing that its guarantees were being withheld, said that all was well and that the future was bright, and then in June is struck by bankruptcy out of a clear blue sky at 48 hours' notice. When those deals were done U.C.S. was given £20 million by the right hon. Gentleman. He knew that they were financial boozers, and he turned them into financial alcoholics—as he did Rolls-Royce.
What is more, now, when they say, "Another little £5 million or £6 million drink will not do us any harm; we will

give it up before long," he has the audacity to suggest that we should keep feeding them with the stuff. It is another of the right hon. Gentleman's white-hot technological marvels that has cooled down from white heat into the red of the account books, and he knows it. His petulant, ill-natured, ill-considered call to the workers to commit the sort of industrial anarchy that he eggs them on to ill becomes any man who has ambitions to sit on a Front Bench on either side of the House.

7.39 p.m.

Mr. Donald Stewart: Many hon. Members have spoken with whom I would wish to quarrel, particularly the hon. Member for Epping (Mr. Tebbit), except for his suggestion that if Scotland had its own Government, we might not be in this predicament today. But the time for developing that argument is not now.
I have heard a lot of Tories from English constituencies, non-shipbuilding constituencies, speaking today. There is nothing wrong with that, but their attitude suggested that they were taking delight in the Secretary of State's refusal to help U.C.S. We had a deplorable speech from the hon. Member for Leicester, South-West (Mr. Tom Boardman), a speech of contentious rubbish, on which he consistently refused to be tackled at any stage. We had disgraceful speeches from Scottish Members, like the hon. Member for South Angus (Mr. Bruce-Gardyne), and the hon. Member for Glasgow, Hillhead (Mr. Galbraith). The hon. Member for Hillhead makes speeches which are treachery coming from a Scotsman, particularly from one who represents a Glasgow constituency.
In speaking about the depression years, the hon. Member for Hillhead gave the impression that he was among those who suffered at that time. I was reminded of the story of the skilled man who was unemployed for three years while the "Queen Mary", of which the hon. Gentleman spoke, was "resting". Having been unemployed for that time, this skilled man appeared at the gate and was told by the foreman, "Your tools are a bit rusty", to which the man replied, "Ay, but you should see your frying-pan." The hon. Member for Hillhead talks humbug on this issue. He is like the foreman.
In a television interview last night the Secretary of State talked about we in Scotland getting help from people who have the interests of shipbuilding at heart. It was a clear admission that he does not include himself among those who have the interests of this industry at heart.
We are in a deplorable position. Whatever part the right hon. Gentleman played in this as an individual, he must accept that the position has arisen from the obsession of the Prime Minister to prove to the Tory troglodytes that he is devoid of a single drop of the milk of human kindness. We are living with a Government whose philosophy is that the balance sheet is sacrosanct and that if it does not show a profit someone or some firm must have its throat cut. We are seeing the phasing-out of this industry by the Tories.
On too many occasions the Secretary of State has taken on the rôle of undertaker at the Dispatch Box while those behind him have played the part of mutes. This is particularly so of Scottish hon. Members. One such person who has been silent is the Secretary of State for Scotland. What was his part in this? What is his attitude to the refusal of the Secretary of State to assist U.C.S.?
The whole country is becoming a lame duck under the Tories. Perhaps £6 million is a lot of money, but it is only a drop in the bucket compared with the £750 million wasted on that empty social lunatic project called the Concorde, which will never pay, even if it is adopted by the world's airlines, which, if it is, will only be a curse to the human race. In any event, all the work on that project was provided in England—[Interruption.]— but the Government will not provide even £6 million to help U.C.S.
Three questions must be answered. First, is it a fact that the news affecting U.C.S. came like a bolt from the blue to the Secretary of State? If the Government have a large financial interest in the shipyard, do they not receive regular reports about what is going on? If so, this news could not have come as such a surprise. If it did, it reveals a deplorable lack of control over public money.
Secondly, did the procrastination in the payment of grants which were due to the yards affect the liquidity of U.C.S.? Thirdly, what part did the Secretary of

State play in this decision? I hope that before the debate ends these questions will be answered. The Government are sowing the wind. They will reap the whirlwind.

7.45 p.m.

Mr. Dick Douglas: I wish at the outset to comment on some of the remarks made by the hon. Member for Oswestry (Mr. Biffen). There is some validity in his argument that, as politicians, we should not make statements about the structure of an industry generally or of a company in particular. Nevertheless, as politicians we make pledges. We made some a year ago, and one in particular that was made by both parties was to produce full employment.
No hon. Member who represents a Scottish constituency went before the electorate last year and suggested that by this date there would be over 120,000 unemployed in Scotland. Nor did we suggest that we would embark on a process which would directly produce job losses.
I regret that the hon. Member for Perth and East Perthshire (Mr. MacArthur) is not in his place. He is fond of quoting the statistics of so-called job losses under the Labour Government. Today, either by design or accident—one can be charitable and say that it has been an accident—the Government are producing job loses and the erosion of skill in Scotland at an alarming rate.
It is nonsense for the hon. Member for the Cities of London and Westminster (Mr. Tugendhat) to deploy sophisticated financial arguments and suggest that somehow or other one can treat the capital deployed in the shipyards of Scotland like rubber to be moulded and used for other purposes.
The Secretary of State, who visited Yarrow's a few weeks ago, knows that capital deployed in shipyards is deployed in a specific way and that the £1·2 million used in that yard is designed to produce sophisticated ships. When the liquidator moves in he looks at the value of the assets. Those assets on Clydebank, at Govan and elsewhere will seem little because they are designed specifically to build ships, and these assets, particularly at Govan, are among the best in the world.
Although hon. Gentlemen opposite may criticise the management of U.C.S., I challenge them to say where they would find a better man than Ken Douglas to manage any consortium or grouping. They may find better accountants and people with knowledge of writing down and revaluing assets, but they will not find a better man to build ships, and that is surely what these assets are designed to do.
A disturbing factor which has not been mentioned in the debate so far is the fact that this is supposed to be a growth industry. The hon. Member for the Cities of London and Westminster is constantly telling us to get on the growth train. Our difficulty has been the restructing of this industry to enable it to benefit from its growth potential.
Although there has been a 25 per cent. reduction in employment during the restructuring of the industry in the last 18 months, between 7,000 and 8,000 men have left the yards in the last five years, and this has not happened without the co-operation of the trade union. I do not suggest that the unions in the shipbuilding industry have been beyond reproach, but hon. Gentlemen opposite must recognise that we have been trying to change attitudes that go back half a century or more.
Unhappily, fear of the dole and the scrap heap is returning to Clydeside. The hon. Member for Epping (Mr. Tebbitt) made great play of a statement in the Daily Mirror, but does he not realise that these men are asking for the right to work? It is not vandalism or a red revolution. In the U.C.S. News of March, 1971, Ken Douglas says:
We all know the self-appointed critics (mainly outside the industry) who have been spreading doubts and fears for the future of the British shipbuilding industry including that of our own company. I however know that we do have a future, and a good one, too, for we have already faced up to many difficulties and solved them and are continuing to make progress.
That is what the men have heard from one of the best managers in the country. Having heard that, if they feel that they are being cheated, no matter what I may think about the constitutionality of their actions, I would not be a shipbuilding worker myself if I did not have the greatest sympathy for them if

they went into the yards and said, "We are not moving until our jobs are guaranteed." Hon. Gentlemen opposite have never gone into a shipyard and scraped the snow off the plates in the morning.

Mr. Kenneth Lewis: Some of us have.

Mr. Douglas: Some may have, but they have deployed their time in making money in a roulette society, neglecting the human elements that made the country great in the past. These men are asking for the right to work in a growth industry.

Mr. Tebbit: The hon. Gentleman really missed the point. The view I quoted was not his view but that of the right hon. Member for Bristol, South-East (Mr. Benn), who expressed it as, "You should regard it as your yard and it is absolutely justified in the circumstances in which you find yourselves." Either it is theirs or it belongs to the nation. It must be one or the other, and it cannot be for both to muck about with.

Mr. Douglas: I am sorry that I gave way to the hon. Gentleman. I am one of a family with five uncles in the shipyard and a father who worked in U.C.S. until he died in September last year. My father used to speak of it as "his yard". It was his sweat and toil that made the yard, not shareholders' money. It was his yard. I have a great deal of sympathy and understanding with the men in the industry who feel that it is their yard. They are saying it at a once or twice remove. They have a deep feeling of identity. It is a tribute to the management that it has enhanced that feeling of identity. I should not contradict the actions of those men.
I turn to one or two points of substance in relation to the background of the debate. The Secretary of State made certain points about lack of knowledge and background information about the viability of these yards. In a debate which I initiated on 25th March, the Under-Secretary of State, the well-known butcher, made this statement:
It is not enough to say, 'These yards are in difficulty financially. Therefore, there must be grants or money from the Government in order to make sure they survive.' There is a duty on those who work in them to make sure that they survive, and we want it to be made extremely clear that the situation is still


critical—it is perhaps true to say that it is fairly critical in all three of the main Clyde yards.
The words were used advisedly that the yards are in a critical state. We are asked to believe, on the evidence put forward by the Secretary of State, that one of his Ministers, knowing that the situation was critical and having a Government director at one remove, was not almost weekly or at least monthly in touch with these yards to get some indication of their cash flow position. I find that very difficult to believe.
Then the Minister, replying with a more euphoric phrase, gave this view:
I believe that there is no reason why the Clyde should not be employing twice as many people in shipbuilding at some future date."—[OFFICIAL REPORT, 25th March. 1971; Vol. 814, c. 1064–6.]
I accept the view of the hon. Member for Oswestry that one should not talk about the structure of an industry and should not necessarily build up false hopes. But I assume that the Minister was in daily touch with the industry, and he is putting forward the view that the numbers employed could possibly be doubled. So there is a futuristic prospect here.
The receiver is on the record, as I understand it, as saying that he will be asking the Government for £3 million to carry on until the affairs are cleared up. May we have the assurance that that £3 million will be granted? If it is granted, why are there difficulties about £5 million or £6 million?
A point of substance on the guarantees is that, in his wisdom, the Minister has held up underwriting guarantees which ought to have been due to U.C.S. These guarantees have to be processed through the Shipbuilding Industry Board. Did the Minister hold up guarantees which had the approval of that Board or did the Board put a question mark into the Minister's mind on the guarantees? If the Board said, "All right, go ahead with the guarantees", what other information did the Government have at their disposal as a reason for holding up the guarantees? These are important points requiring an answer.
We can accept the process of change. No man has a right, in days of technological change, to think that he can go into an industry at the age of 16, or whatever it may be, and be employed

in the same industry until he is 65. All thinking people, including trade unionists, accept that. A man in Britain has a right to expect that if a Government, by their action or by their failure to act, throw him on to the scrap heap, that Government and the nation have a responsibility. If there are to be regroupings on the Upper Clyde, these ought to be brought before the House for debate. We shall not stand idly by looking at the situation developing as it is at present.
The Government and the House have a responsibility. The people of Scotland recognise that industrial change has to take place. We have had a tremendous process of industrial change in the past 10 to 15 years, most of it, especially in the period of the Labour Government, underwritten by a humanitarian outlook. Hon. Members opposite will be challenged and held accountable by the nation if, on the basis of a mere accountancy standard, they allow the humanitarianism of Britain to go by the board and create once again two nations.

7.59 p.m.

Mr. Ronald Bray: The hon. Member for East Stirlingshire (Mr. Douglas) made a number of points with which I wholeheartedly agree. I endorse every word he spoke about the right of man to give of his labour. The hon. Gentleman spoke of the loyalty which one hears of in day-to-day language around a yard or a factory—"our yard", "our factory". People come to look on the premises where they work as their own property. I welcome remarks such as those.
Unfortunately, in other words, I cannot follow the hon. Gentleman. There are hon. Members on this side who have got their hands dirty with steel plate work and who have scraped snow off steel plates in stockyards and the like. I am proud to be one of them. I have worked with my hands for years. I am always proud to do so and to keep fit and be able to work. In that way a man knows the other side of the coin and does not sit humbly on these benches listening to those who would imply that we have no practical knowledge of industry.
Great play has been made about £90 million worth of orders. This evening's Press speaks of debts amounting to £28 million. According to my rough and


ready calculations relating to the construction of ships £28 million equals the cost of the raw materials which would be required to fulfil those orders. I am not including engines and fitting out; it is the pure raw material element of the order book which equals the debt or the millstone which is currently around the yards' necks.
It makes me wonder how far we can rely in any reconstruction on the present financial and executive management being competent to continue with the task lying before them and to turn what is claimed to be possibly a break-even on production business into one which is capable of showing an adequate return.
Much has been said about the yards' present general manager. I have not had the pleasure of meeting him. No doubt he is very competent. It appears that those above him on the administration side are far from competent. I wonder how any hon. Member can consider pouring further money into that business whilst those men remain in control. Those are the men who have got through approximately £20 million in 3½ years with virtually nothing to show for it except debts just announced to the tune of £28 million.
I should not object to seeing Japanese, German, Swedish or Norwegian executives in the yard if they made the yard into a viable unit; because that is what both sides wish to see. To be viable, an industry must be efficiently managed. It would appear that such has not been the case with the Upper Clyde consortium.
We may also wish that further economies can be made in construction. It is not so long ago in terms of shipbuilding that welding was considered to be a novelty. We have learned much since then. We have learned that we can cut out waits and production time by new methods. All these points should be considered, because it was the reluctance to accept new methods in years gone by which has helped to run shipbuilding into the ground.
I regret having to mention the question of demarcation, but automatic welding caused its troubles, again undermining the industry's profitability in the long term.
These are issues which must be faced. The new management, whoever they may be, as well as those in the yard, must be receptive to new ideas and must implement them without any holding back. If they are to pull the yard round, as I am convinced that they can, these points must be considered and the shipyard workers must accept that they are responsible, equally with the management, for the yard's prosperity, which means that the ships must be produced on the right date, free of defect, and in accordance with specification. I am positive that this can be achieved.
I pose four questions to the Minister with particular reference to the previous activities at Upper Clyde. First, how many working days have been lost through strikes since the yards were amalgamated in February 1960? The right hon. Member for Bristol, South-East (Mr. Benn) made great play of the increase in the number of ships launched or completed over the years. I should like to know, second, not only the number of ships, but also, third, the gross tonnages and how many of them were delivered on time.
Fourthly and finally, what is the number of late deliveries and of potential claims which may be submitted against the yards by virtue of their failure to complete?
Apart from these four questions, I believe that the suggestions put forward by the Government must be supported by those who would not hide their heads in the sand. I therefore propose to give every support that I can to the Government's handling of this matter.

8.6 p.m.

Mr. Robert Hughes: I shall speak briefly because I know that Members with great constituency interests are waiting to be called.
I state my interest, first, from the general point of view of being interested in the Scottish economy and, second, as a member of a trade union which is vitally concerned in the work available on the reaches of the Clyde.
I listened very carefully to the statement made this afternoon by the Secretary of State. The right hon. Gentleman started by telling us that he would elaborate on the necessarily short remarks that he made yesterday. His remarks today


were longer but they contained not one new item of substance. What we were looking for from the right hon. Gentleman today was some statement about how long he would guarantee the yards to keep them going at full capacity until there can be a decision about the future. His is now the responsibility for ensuring that the yards are maintained and that the fullest possible level of employment is maintained within the yards.
The Secretary of State cannot escape the consequences of his own actions and inadequacies. It is no good his telling the House that as the senior Minister in a new Department—one of the new super-Departments which is allegedly overseeing great areas of trade and industry and overseeing the whole pattern of planning for the future—he did not know what was happening in Upper Clyde Shipbuilders. It is the negation of government to say that there was no contingency planning for what was ahead.
It is no use the Government saying, "We have been the Government for only 12 months. We cannot be expected to know all the problems." They knew of these problems long before they came into government. We were told all about the marvellous conferences at such places as Selsdon Park where future policies were worked out. During the election period there were stories of the computer which was installed in the Prime Minister's Albany flat and was supposed to provide all the answers to Britain's problems and would, almost at a stroke, wipe out what the Tories considered to be six years of Labour Government.
A year later, after all the organisation and government, the import from the C.B.I, tells the House, "Sorry, chaps. I did not know anything about it. You cannot blame me. It is all the fault of the fellows who left office." This is not government. The sooner the Ministers realise they are there and must do something about it the better.
I believe that the whole crisis in U.C.S. stems from a series of events, not at the time obviously inter-related, but—with hindsight, I admit—showing a clear pattern of responsibility. It started with the famous "lame duck" speech. That was bad enough. It was followed by the collapse of Rolls-Royce, which was even worse. I remember hon. Members on

this side telling the Secretary of State and the Prime Minister that the serious consequences of the welshing on the Rolls-Royce debts would reverberate throughout industry. It is no joy to anyone on this side to have been correct.
The crisis of the cash flow and the cash crisis in U.C.S. is a direct responsibility of suppliers being in jeopardy. Every time hon. Members on this side have tried to plead the case for the subcontractors of Rolls-Royce we have been met with the bland statement, "That is the responsibility of the liquidator. The Government have no responsibility."
Faced with the withdrawal or nonavailability of guarantees, how else can one expect creditors to behave than to begin to demand their money quickly? As they begin to demand their money quickly and it is not forthcoming with the necessary speed, what story gets around? I have been in industry long enough to know what happens when the money is not coming in. One hears from people involved in the same line of work that the money is not being paid, and one begins to press harder and harder. I am convinced that the whole responsibility for the crash of U.C.S. rests squarely upon the shoulders of the Secretary of State and his Department.
Why is not a Rolls-Royce type situation—not a welshing on the debts, but a nationalisation of Upper Clyde Shipbuilders—being contemplated to keep this vast industry going? Is it simply because no defence interests are involved? This was the great excuse that we got from the Tories for not allowing Rolls-Royce to go to the wall. It was the defence interests, not the interests of the shareholders or of the workers.
It never ceases to astonish me that if the merchants of death want money there is no hesitation in finding it. If people are seeking money to provide weapons to kill people off in millions, there is a bottomless purse to provide that money. When it comes to the building of ships for peaceful purposes and to providing or safeguarding jobs for people and keeping the country's economy going, we cannot find £5 million or £6 million or even £3 million.
The Government must not think that the U.C.S. business is the end of the


matter. I hope that they can reorganise it in such a fashion that all those employed in the yards can be maintained in employment and all the orders fulfilled. Whatever the future is, unless there are firm guarantees from the Government for the next five years at least as to credit for U.C.S. there will be a recurring cash flow crisis in a couple of years as other firms in different parts of the country go down.
The Government do not seem to have realised that with the "lame duck" speech they started a snowball trickling down the hillside that has grown bigger with the passage of time and which may well reach avalanche proportions. It is not just U.C.S. and the future of the consortium. What about Swan Hunter, Harland and Wolff, and other shipyards? They will be concerned.
I am concerned from a small constituency interest which I mention in passing, because in face of the massive problem of U.C.S. the small shipyards in Britain are of no consequence. I should not wonder if many small shipyards throughout the country are not having the jitters about what the future holds for them.
I have always been very concerned about pumping money into private enterprise when the money is simply going to shareholders and not going down to the men in the yards or on the shop floor. This is not my concern about U.C.S. With my political and Socialist conviction, I often had a lot to swallow in view of the amount of money made available to private enterprise by the Labour Government. But I accepted that that should be done because it was necessary for the good of the Scottish people and people working in factories throughout the country. I have never forgotten the statement by the ex-General Secretary of the Scottish Trades Union Congress when I, as a young lad, appeared to criticise the immediate past Secretary of State for Scotland and others for doing too much to prop up private industry. George Middleton told me,
The road to Socialism, brother, is not paved with derelict industries.
I remind Conservative hon. Members that the road to one nation is not paved with derelict industries.
My only regret about the actions of the last Government towards U.C.S. is that they did not do the job properly by nationalising it and making it a truly national concern—and not only U.C.S., but the whole of the shipbuilding industry. I hope that when my party, of which I am proud, becomes the Government again my right hon. Friends will have learnt the lessons and will not allow any possibility of crashes like U.C.S. to be on the horizon.

8.16 p.m.

Mr. Kenneth Lewis: My only reason for intervening in the debate is that I have a background of interest in the shipbuilding industry and served on the Committees that dealt with the industry in the last Parliament, when we were providing subsidies to assist it.
I am amazed by the tone of the Opposition when dealing with the present situation. My early experience of the industry was very different from the situation that faces U.C.S. or the country through the action of my right hon. Friend the Secretary of State for Trade and Industry. My early experience was of an industry that got into trouble in the late 1920s and early 1930s, when there was a closure of the yard in the town of Jarrow, in which I lived, resulting in 85 per cent. of the people there being out of work. My father, who was employed in the industry, was out for 2½ years. In due course, as a young man I became a labour manager in a shipyard on the Tyne. So I have a knowledge of the industry and an interest in it and a very warm regard for everyone who works in it.
The industry has been subsidised since before the war, though it was subsidised in rather a different way then, through the naval programme. It was because the Government of the day cut back on the naval programme that the town in which I lived lost its yard overnight. That happened partly because Labour hon. Members asked the Government to cut back on armaments. I am sure that the hon. Member for Aberdeen, North (Mr. Robert Hughes) did not mean all he said. He must recognise that part of the armaments programme can be a ship. I have not noticed that those who represent shipyards have ever been very slow to request


that the Government should build armaments in the form of ships to provide work for the yards.
The surprise I had about the invective of right hon. and hon. Members opposite against the Government action in the present situation is because I do not see it leading to large-scale unemployment. I intervened in the speech of the hon. Member for Fife, West (Mr. William Hamilton). He called me rather silly. I call him names sometimes, and sometimes he calls me names. We do not mind very much. I cannot imagine that my right hon. Friend has taken the action he has taken today in order to cause, as the hon. Gentleman suggested might happen, 30,000 people to become unemployed. If that happened, my right hon. Friend would have me to contend with as well, because unemployment is already high enough, and is bound to go a bit higher in the winter anyway. The last thing I would put up with would be a Secretary of State for Trade and Industry who deliberately discharged a policy the aim of which was to add to the existing unemployment and the high unemployment that there is likely to be in the next few months. I am certain that is it because my right hon. Friend wants to avoid unemployment in the Upper Clyde that he has taken the action that he has.

Mr. Thomas Swain: I am very interested in the hon. Gentleman's argument. Can he tell the House what will be the effect of the Government's action on employment or unemployment in Scotland?

Mr. Lewis: I am coming to that. The present situation is that, subsidies having been started in the last Parliament, a certain section of the shipbuilding industry seems to consume those subsidies very heavily, whilst other sections have not applied for subsidies on the same scale.
The granting of subsidies to the shipbuilding industry as such is probably questionable, but there is a case for subsidies for the shipping industry, provided they are related to the kind of subsidies being given by other countries to their own shipping industries. Clearly, it is impossible for the shipbuilding industry to compete in price if it is competing against overseas firms that are heavily subsidised. No Government should discount that point, and I hope that my right

hon. Friend will not do so, and that no sane Minister would do so.
It must now be apparent to Labour right hon. and hon. Members that profitability in industry, whether it is nationalised or free enterprise is essential if we are to preserve employment. If there is no profitability, sooner or later the taxpayers are bound to say of a nationalised industry, "We cannot go any further", and with a private enterprise company sooner or later the same thing will be said by the market, which is the ordinary man in the street in these days of unit trusts and insurance companies, which provide large amounts of money for industry. The trade unions have their own unit trust, which has money invested in private industry. I put some money in it some years ago, but it has not grown very much. If industry is profitable, the unit trust provides increasing dividends. Profitability is essential if the workers are to retain their jobs. Without it, there is run-down, and if there is run-down there is a liquidation of labour forces, redundancy, pay-off.
Upper Clyde Shipbuilders is almost a Government company. Many of us have been talking today as though it needed to be nationalised, but the Government own 49 per cent. of the equity. I cannot accept that my right hon. Friends did not know what the state of the company was, because if I did I should not believe that they knew what they were talking about when they talked about free enterprise.
I have a small company, and it is my job to see that it is profitable. I do not see why I should pay heavy taxes out of my company profits to provide an excessive subsidy for other, larger companies that cannot make a profit. If in my small way I put some money in another company and took a shareholding in it, I should want a work and progress report every few months. I should want to know exactly what was happening to my money. The Government are in exactly the same position. I am sure that they knew that the company would very soon get into difficulties. I accept that it may have been a surprise suddenly to find that it had only a week of wages in the kitty, but I am certain that they did not think that it had much more than money to pay the wages for a month or so in the kitty.
So my right hon. Friend decided to liquidate the company deliberately, as part of policy. When hon. Members opposite say that, I accept it. But the reasons why he did it were quite different from those which they have given, and which they are giving to the workers in Glasgow. The right hon. Member for Bristol, South-East (Mr. Benn) yesterday went to Glasgow to try to poison them against the Government. He told them exactly the same as he has told the House today, that the liquidation of the company was to create unemployment and to put the yard into the ditch. That is not true, and the weeks will show that it is not true.

Mr. Ron Lewis: What are the Government going to do with the yard?

Mr. Lewis: That can only be proved in a few weeks from now. The first reason why the company has been liquidated by my right hon. Friend is that that was the only way he thought that he could get the structure right. That is not political dogma, but good business sense, which is the great difference in outlook between the present Government and a Labour Government. The structure created by the right hon. Member for Bristol, South-East was very wrong, and he knows it. My right hon. Friend and the Cabinet decided that the only way to get it right was to allow the company to go into liquidation. If they could have got it right in any other way which was not unduly costly, they would have done it. In other words, they calculated that it would be cheaper to let it liquidate and then get it right than to go on slowly tinkering with it, while all the time it was eating up the taxpayers' money.

Mr. William Hannan: Is the hon. Gentleman suggesting that his right hon. Friend's Department has given all that consideration to the matter and in four days made such a decision?

Mr. Lewis: Of course not. My whole speech has led up to this point. I said that my right hon. Friend had known that the present situation was coming, and deliberately thought that the present policy would be the best way to get the restructuring right.
The second reason for my right hon. Friend's allowing the company to go

into liquidation is that he wanted to put some backbone into it and to encourage the backbone in the other companies in the shipbuilding industry which have some backbone. If the Government had continued to ladle out subsidies to the Clyde, what would have happened to the firms on the Tyne, such as Swan, Hunter and Hawthorne, Leslie, the companies that I know, the company that I worked in, which has been struggling valiantly with very little subsidy and has successfully reorganised itself into an effective group, has got its management structure right, and has made improvements in its labour relations, with a working together of management and unions? That is a great advance on anything that has happened before.
What would have happened if yesterday my right hon. Friend had said "Well you have done very well, but the lame duck in Scotland, which has not done well enough, will continue to receive subsidy." My right hon. Friend will still be supporting this group for the next few months in other ways. He has already said that the Government will stand behind the wage bill. I am certain that he has no intention of creating unemployment. What he is intending to do is to restructure and so encourage the new set-up, with new management if necessary. Some of the management is good mangement as has been said on the other side. I would not have thought it sensible to sack such competent management as there is. He has to get the financial structure right, and once he has done that this group will be in as strong a position as is the Swan, Hunter group on the Tyne. Furthermore it will be encouraged to stand on its own feet. It will have backbone.

Mr. Gavin Strang: Surely the best way of restructuring this firm is not to force it into liquidation. That may be the best way from a business point of view, but is he saying that from the point of view of the workers in Glasgow it is the best way?

Mr. Lewis: Yes it is. The hon. Gentleman knows perfectly well what liquidation means. The difficulty is that outside—and the Government must beware of this—liquidation normally means that in the minds of the public there is the picture of a close-down, a shutting of the gates and a paying-off of the workers.


This will not happen. This is not liquidation of that kind. This is simply a blood-letting operation which will enable the Government to do what they like structurally, or with management, to achieve a new set-up.

Mr. James Sillars: The hon. Gentleman is making forecasts about what will happen and what will not happen. Is he aware that the people on the Clyde want to know from the Government and have not heard? Will he say how many people will be unemployed because of the decision?

Mr. Lewis: I do not know whether the hon. Gentleman has just come in.

Mr. Sillars: I have been here all day.

Mr. Lewis: But has the hon. Member been present during my speech? I spoke about unemployment at the beginning and made it clear that in my view the Government did not want to create more unemployment. They intended, through this action, to reinforce a consistent and profitable industry on the Clyde and in this group. The right hon. Member for Bristol, South-East made great play this afternoon with the misquotation, or misrouted quotation, of my right hon. Friend taken from HANSARD. The truth is that that quotation was a very clear one by the right hon. Gentleman.
The right hon. Gentleman, when he was in Government, said that there was a limit to Government subsidy. There came a time when Government subsidy had to stop. If it had to continue, the Government must take other action along with that subsidy. That is what the quotation meant, whether it referred to Beagle or this group. Does he still think that? Does he still think that it is helpful to an industry, or a section of an industry, to continue to treat it as though it were part of the Welfare State? Does he not think, now, as he thought then, that it is better to attempt to put some backbone into it, to make it enterprising so that it can be profitable both for the area in which it operates and for the people who work in it?

8.35 p.m.

Mr. Hugh McCartney: Representing as I do a constituency in which is situated the Clydebank division of U.C.S., I wish first to say that I am not an economist and do not intend

to follow the academic, economic dialogue which has been floating backwards and forwards and which has included a considerable amount of waffle intended to restrict the time available for more useful purposes.
I represent an area which will be seriously affected by the decision made by the Government yesterday and the decisions which the Government may make in the next few weeks. We on Clydeside, especially in the Clydebank area, have suffered disastrously since the Tory Government came to power last year from the run-down of industries, redundancies and closures of factories all over the area. The decision announced by the Minister yesterday is a further step in the decimation of general industry in the area. The right hon. Gentleman's statement yesterday confirmed my long-standing belief that it was almost the intention of the Government to use U.C.S., particularly the Clydebank division, as an example to justify and give credence to the Minister's "lame duck" statement.
Today, when we expected the Minister to fill in the details of the intentions and future prospects, all we had from him was a longer speech containing no more information. This confirms that the creation of unemployment is a principal prop in the economic policies of the Government. When a similar statement was made yesterday, several hon. Members on the Government benches shook their heads in dissent, but if the Government are not carrying out a deliberate policy of this kind, God help us. When one considers the massive unemployment the Government have created, what will be the result next winter when the policies bite into the industrial body of Scotland, particularly in Glasgow?
In reply to a question from me yesterday, the Secretary of State for Trade and Industry said:
There is a grave risk of escalating beyond reason at the moment the problem in regard to unemployment and the impact on suppliers and families. I believe that this was the case in the Press over the weekend. I do not anticipate that the kind of figures which have been mentioned are the figures with which we shall be faced, but it is the Government's firm intention to achieve that that shall not be so."—[OFFICIAL REPORT, 14th June, 1971; Vol. 819, c. 37.]
Will the Minister give a clear indication of what is to happen with the restructuring of U.C.S.? Is he saying implicitly


in his reply that he will save the whole organisation and the employment opportunities in these yards, or is he saying that 25 per cent. will be cut away? If the latter, who will be the 25 per cent. at work at the moment who will be chopped off? If he does not know, was the reply he gave to me yesterday the first thought that came into his head, or was it another illustration of the Minister's intention to mislead the House when direct questions are put to him?
In the yards under U.C.S. control, in the Govan division there are 2,500 employees, in Clydebank 2,600, in Scotstoun 1,000, in Linthouse 400. There are 290 apprentices and 1,500 staff over the whole organisation. Those figures applied on 15th June this year, and they are roughly 2,800 down on the March, 1970, figures. That figure shows that we were yesterday as I claimed, talking not in terms of 7,500 or 30,000 persons but in terms of 120,000 human beings, and that I was nearer to the truth than was the Secretary of State when he replied to me.
If 25 per cent. is cut off that figure, taking families into account, the number involved will be near to 120,000 persons. Although it might be fine for hon. Gentlemen on the Government benches and the Secretary of State for Trade and Industry to talk in terms of balancing the books, we on Clydebank do not consider the balancing of the books to be the end of the matter. We must take account of the human and social problems which we have been living with over the last year, which are multiplying every day and which the Government intend to multiply further.
The workers and their representatives have been quoted times without number by Tory hon. Members as being responsible for the downfall of U.C.S. and of other companies, the run-down of companies and the loss of business opportunities to them. No one can honestly point a finger at the employees in the U.C.S. yards, for their contribution towards creating a viable situation in U.C.S. has been second to none. There is no doubt about that. These conscious decisions made by the workers and their representatives were made under extreme difficulties, in the face of a long tradition of bitterness between management and men, to try to get away from the old

methods and the old bitterness and hatreds. Now they find that the wheel is turning round again, and they are in the position they were in several years ago when they had to choose between continuing the process of better understanding, better productivity and viability for their industry and going back to the old days of protecting their jobs by whatever means they could.
Speaking on the Second Reading of the Industrial Relations Bill, I referred to the fact that the Government's general policies were forcing us towards a situation that could lead to social disorder, for which the Government would be responsible. I said:
These matters suggest to me that the Government fully realise the implications and the social upheaval that can be caused by the legislation they are putting through."—[OFFICIAL REPORT, 14th December, 1970; Vol. 808, c. 1021.]
Taking this in the context of U.C.S. and the general situation on Clydeside, the Government are telling the workers that they are not interested in preserving their jobs or in maintaining a decent standard of living for them and their families. The only reaction that can come to that is the one which the shop stewards and workers in U.C.S. have already taken. If there is a substantial job loss, a substantial reduction in the earning capability of the men and women in the area and suffering for the men's wives and families, then they will prove that they can do the job without the Government.
I was in Glasgow on Clydebank last night with my right hon. Friend the Member for Bristol, South-East (Mr. Benn). I can confirm to members of the Conservative Party that if they go on for ever talking about this matter without producing the goods for the workers on Clydeside, they had better think again. Unless the Government realise this and take immediate steps to reverse the policy indicated yesterday by the Secretary of State, we shall have on our hands a situation where we shall have to bring back the troops from Ulster because they will probably be needed in places like Clydebank and elsewhere.

Mr. Kenneth Lewis: Ridiculous.

Mr. McCartney: It might be ridiculous to the hon. Gentleman, but that is the Government's frame of mind and, therefore, it is a distinct possibility. The


Conservative benches do not seem to understand what is happening. I believe that we are entering a situation similar to that in the 1930s. Certainly no workers on Clydeside are complacent about what happened in those days. They remember the hunger marches and still talk about the 504, or the "Queen Mary" as it became known, which lay rusting in the yards. The Clyde shipbuilders are determined not to return to such a situation, even if it means taking over the places of work, using the tools in these places and continuing to produce the goods.
One hon. Member mentioned earlier that a hull had been towed away from one of the Clyde berths. I guarantee that no hulls will be towed away from U.C.S. yards because the trade unions have decided to control those yards and they will not agree to any such course. The other trade unions will make sure that anything that prevents the workers achieving their aims in this connection will be obstructed by them. I believe that we should try to avoid the bitter and social policies which bring about degradation, reduction of standards, poverty and the loss of dignity that goes hand in hand with continuous unemployment.
It was a most unpleasant experience to see Tory back benchers stand and cheer the statement which was made by the Secretary of State. It was an unqualified statement and indicated nothing except that there would be unemployment on Clydeside. I saw many members of the Tory "boilermakers branch" leave the Chamber as soon as this debate began. That shows the difference in attitude between the two sides of the House. I approve of the proposition that U.C.S. should be nationalised as a first step towards nationalisation of the shipbuilding industry.
For some weeks I thought that the "Last of the Baskets" was a canned television programme for projection throughout the United Kingdom on a T.V. network. Judging by all the things I have heard from hon. Members opposite in their deliberate attempts to frustrate honest and serious debate, it makes me think that we have a rival programme on the Tory benches. The workers realise that this is happening and will give their

answer to the Tories if they ever have the guts to stand in a General Election.

8.46 p.m.

Mr. Tom King: The hon. Member for Dunbartonshire, East (Mr. McCartney) will forgive me if I do not follow him in his remarks. In one sense nobody could really hope to do so since the hon. Gentleman is very much closer than other hon. Members in this House to many of these issues in the tragic situation which this disaster represents.
There is one point which perhaps I would make about the hon. Member's speech. In the present serious situation which neither side would attempt to diminish what best serves the interests of all who work on Clydeside—is a realistic approach to the problems that exist. I regret that much of the benefit of this debate has been lost because it has occurred so soon after the event. The Secretary of State's announcement was made yesterday, a liquidator has been appointed today and the House has gone straight into a debate, during the middle of which we are informed in tonight's Evening Standard about matters which must be new to many hon. Members, and obviously many important facts will become evident as the hours pass.
Hon. Members understandably have been pressing my right hon. Friend to say what will happen in this situation and have asked how many redundancies will occur and what the new form is to be. Every hon. Member knows that it is impossible for my right hon. Friend, within 24 hours of this decision having been announced and with a liquidator having just been appointed, to come forward with answers to those questions. A further debate will soon be necessary when more of the information is known.
I am glad that the right hon. Member for Bristol, South-East (Mr. Benn) is in his place since I wish to address myself to what has been the essential thesis of the Opposition attack made on the Secretary of State. This surely is that the reconstruction of U.C.S. was just reaching its peak, that it was just coming to a final difficult cash flow situation, and that with this one last injection it would be out in the open country and the future of the shipyards would be assured. This is the thesis which has been advanced, and the argument has been that the


Government's failure yet again to inject capital, as it were at the last ditch, has let down a group which would otherwise have got through and stood on its own feet.
I apologise for being absent from the Chamber for a short time, but I took the opportunity to try out this thesis on a number of people with experience of shipping who are in no way partisan and have interests both as customers and observers of the situation on the Clyde. I presented this thesis to them and asked, "What is your honest opinion of that?" The reply was, "That simply is not true; that is not the situation". There are other elements with which I should like to deal of which I am critical, but that thesis as a criticism does not stand up to the facts and the information which I have received.
The hon. Member for East Stirlingshire (Mr. Douglas) referred to this as a growth industry and said that there were great prospects for shipping. From the information which I have received I can appreciate the situation which faced my right hon. Friend. There have been great improvements. There has been a boom in shipping. Shipowners have been prepared to pay almost any price to get ships because there was a boom in shipping rates. That situation has changed drastically. We have heard that U.C.S. was coming out into open country, but future marketing prospects are now extremely uncertain. We are facing a severe shipping slump. Those with ships on order are now offering them for resale. This situation has not so far been mentioned by hon. Members. People who have placed orders are trying to get rid of them. That is hardly a rosy outlook for a shipyard to face in terms of future market prospects. This is an international situation.
The right hon. Member for Bristol, South-East referred to new developments in standard shipping such as the Panamax bulk carrier. I take no pleasure in saying that I do not know of any exciting sales prospects for it. I understand that it was recently exhibited at the Oslo Fair and that no orders were taken for it. If this is one of the main planks for the future, we can see how difficult that future may be.
It also seems grossly unfair to treat U.C.S. as one unit. I understand that it is very much the curate's egg. Glasgow Members will know this only too well. There is a great difference in performance. The right hon. Member for Bristol, South-East quoted the average figures for performance and improvements in productivity. Perhaps his right hon. Friend the Member for Kilmarnock (Mr. Ross) will give the figures broken down for individual yards to show how uniform or otherwise the improvements were.
Some pretty glowing tributes have been paid to the management. I was brought up in an old school which believes that management must face the final responsibility in all these matters. I have previously referred in the House to a very good slogan which used to hang behind President Truman's desk saying, "The buck stops here."
I think that the management have some real questions to answer. In February of this year, when customers for ships on the stocks were agreeing to pay a further average of 8 per cent. for their ships, they were given to understand that the cash situation was really all right, and that it was only a fad of the D.T.I, that they were being asked to subscribe the extra money.
Only a month ago speeches were being made, not least by the managing director, to the effect that they were through the worst and that things were now going well, and yet, I understand, at that very time there were ships which could not be completed. On one ship alone, 250 separate items could not be installed because U.C.S. could not afford to buy them. It had not got credit with the suppliers to enable it to get hold of those items. Other items were installed in other ships only because the owners themselves put up the money to get them.
That brings me to my point about what really has been going on from the point of view of getting information about this situation. When there is this scale of liability, and when the Government are so heavily involved, one asks whether this company may have been in breach of the Companies Act for some considerable time. It may be that it was continuing to trade when it was no longer


viable if it did not have assurances of support.

Mr. John Gorst: Would it be part of my hon. Friend's argument that had the right hon. Member for Bristol, South-East (Mr. Benn) known of this £28 million liability when he was on his feet he might have drawn a slightly different conclusion from the one that he did?

Mr. King: I accept my hon. Friend's point. There are many questions that need answering, and one matter with which I hope my hon. Friend will deal is that of control over the way in which public money is spent. I accept, even though some of my hon. Friends may not, that there may be occasions on which public money can be properly applied if it genuinely helps to overcome temporary difficulties in restructuring, provided that there are genuine prospects for the future, but what we want to make sure of, above all, is that if public money is spent in that way there is an effective monitoring system so that we know what is going on. Has there been any change in the monitoring system used by the previous Government so that this Government can control the way in which public money is spent, and can know what is happening to public assets of this kind?
There is no question but that this emergency arose, more than anything else, out of a total lack of confidence on the part of suppliers, and because of the drying up of credit. It is against that background that we await fuller information on this tragic matter.

8.59 p.m.

Mr. William Ross: It was the hon. Member for Epping (Mr. Tebbit) who described this as a fascinating debate. I have been fascinated by it—not least by the way it started. The Secretary of State for Trade and Industry spoke very quietly but was, I thought, under some strain. He was probably realising for the first time exactly the enormity of the disaster that this means for ordinary men, their wives and their families. Yet his speech was more like a recital of a company secretary than a great political occasion—and in Scotland this is a great political occasion.
It was only when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) gave the coup de grace with the

truth about that quotation that I began to realise just why the right hon. Gentleman was under a strain. I am convinced that he knew that the quotation he used yesterday was wrong, but he decided not to get up and make the kind of statement that he should have made and apologise to the House.
The hon. Member for Orkney and Shetland (Mr. Grimond) is quite right—[Interruption.] I know that the hon. Member for Bedford (Mr. Skeet) was here for part of the time, but he was not here all the time. I reckon that I heard a lot of the speeches. If he thinks that I can stand here on this occasion without being politically controversial, he does not know me at all. As well as the right hon. Member for Orkney and Shetland, my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) also mentioned this point.
A little more explanation is required. The Secretary of State should know that when one makes a mistake of that kind what the House prefers is someone to come forward without being pushed, to make the apology or explanation, and that is the end of it.
There was one moment when he said that he was concerned about the enormity of the effect on the men and on the owners and on the industry, but what I deplore is that he failed to accept his own responsbilities for regional policies and put this into its proper setting. It is not just the Scottish setting of 117,000 wholly unemployed. It is a Glasgow setting; it is even more a section of Glasgow and the Clyde setting, where there are already nearly 30,000 wholly unemployed, with a male unemployment rate of 9·6 per cent.
The hon. Members for Bedford and for Leicester, South West (Mr. Tom Boardman) said that it was time that these men got other jobs out of this industry. Where are they going to get them? The Secretary of State cannot give us any optimistic news about what will happen in the city of Glasgow, the greater Glasgow area or the Scottish area over the next winter.
My hon. Friends have said that unemployment in Britain is worse than it has been for 40 years. We cannot say that in Scotland. The monthly average rate of unemployment in Scotland for the first first four months of this year was


119,000. We have only to go back eight years to 1963, when the figure was 120,000 for the same months. And the Prime Minister of today was the man responsible for regional policies at that time. Need none wonder at the sullen looks and angry feelings in Glasgow now. These men have been through it all before.
The hon. Member for Glasgow, Hill-head (Mr. Galbraith), who was a Minister at the Scottish Office, spoke today rather scathingly about this whole issue of giving assistance. He said, in effect, "It is not fair or sensible to sign blank cheques." They were interesting remarks and he was the only Scottish Tory hon. Member to contribute to the debate. [Interruption.] I am glad to see a few more of them coming into the Chamber. I do not blame them for being absent. I dare say that having heard the speech of the hon. Member for Hillhead they had had enough.

Mr. Galbraith: They did not need another after that.

Mr. Ross: As the hon. Member for Hillhead was speaking my eyes fell on the Under-Secretary of State for Health and Education at the Scottish Office. Are hon. Gentlemen opposite aware of who was asking for money for U.C.S. when it was in difficulties in the past? The hon. Member for Hillhead, a former Under-Secretary at the Scottish Office, was one of them. Has he forgotten? Does he recall asking my right hon. Friend the Member for Bristol, South-East when we were in office:
as he was responsible for the shotgun marriage which created the U.C.S. he has some responsibility to see that there is a sufficient dowry to make the marriage workable."—[OFFICIAL REPORT, 21st May, Vol. 784, c. 405.]
He was asking for more money—

Mr. Tebbit: He was asking for a dowry not a pension.

Mr. Ross: —and a month later he said:
we are glad that, for the time being anyway, Upper Clyde Shipbuilders will be able to carry on.
He was not asking for bankruptcy then but for more money. He went on:
Can the Minister explain the nature of the difference of £3 million between what the

company considered necessary and what the Government were willing to offer?"—[OFFICIAL REPORT, 19th June, 1969, Vol. 785, c. 722.]
He was suggesting that we should be giving more. Today, however, in his wisdom, he takes a different view—but is he as wise as the other three wise men about whom we have heard today?

Mr. Galbraith: If the right hon. Gentleman will do his research work thoroughly, he will go back to the beginning and quote what I said on the Second Reading on what was then the Shipbuilding Industry Bill. He will find the same philosophy that I eunciated today. If that had been followed we would not be facing the trouble that we are facing today.

Mr. Ross: I will certainly go back to the beginning. The Secretary of State spoke of what happened in 1966 and 1968, but that was not the beginning. I spoke to a man who has today been on the Clyde for 35 years. He was telling me of what happened a lot earlier than 1964. He recalled what happened to Dennys, Blythswood, Inglis, Harlands and Simon Loebnitz. Year after year one yard after another went out of business and the Government of the day did nothing.
When Fairfields were in the same position the Labour Government stepped in and saved it. We had already set up the inquiry that led to the Geddes Report. When we saved Fairfields, hon. Members from Glasgow constituencies were pleased, although I can remember the sniping we faced from the Conservative Front Bench, even when we went on to debate the Shipbuilding Industry Bill. Under that Measure about £55£ million was laid aside for this industry. It has been used well by many yards and without it shipbuilding would have faced a disastrous future in the late 'sixties.
Would any hon. Gentleman opposite who represents a shipbuilding constituency say that the Labour Government should not have intervened on that occasion? If they would they would prove themselves completely out of touch with reality, though what we did was contrary to the dogma of many Conservatives. The Under-Secretary of State for Trade and Industry, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), may recall that he said at that time that it would


be better to leave things to the free play of the market—let Fairfields go; let U.C.S. go. He was the architect of the butchering plan that we heard about in the Guardian today. I ask the Secretary of State for Scotland whether he knew about that plan. Did he get a copy of it? I want a direct answer.
This explains a lot about what the Conservative Party intended to do when they assumed office. This was following the peregrinations of the Under-Secretary of State with Sir Eric Yarrow and with Lower and Upper Clyde people. He wrote his report and a Government butcher was put to work to cut up U.C.S. and sell cheaply to Lower Clyde and others the assets of U.C.S., and—a phrase reminiscent of the statement we had from the Minister—to minimise the upheaval and dislocation. I am sure that the right hon. Gentleman remembers using very much the same phrase. That is what he will do; reconstruct to minimise the upheaval and unemployment. But this was the policy put forward to the hon. Gentleman's shadow Cabinet.

Mr. William Hamilton: Butcher.

Mr. Ross: Another strange thing about the whole of the exercise is that the right hon. Gentleman says, rather like the Prime Minister, that he did not know anything about it; no one told him; he did not know until last Wednesday. Yet in his recital of events and his concerns, and the activities of Mr. Mackenzie, whom I know very well, and I am sure is a very good director and would keep him informed of what happened—

Dr Dickson Mabon: He says "No ".

Mr. Ross: I am sure that the right hon. Gentleman is not saying "No". He is dealing with the reputation of others, as well as his own. Mr. Mackenzie was put in by the Government as the liquidator in the Fairfields case. He is a man who is very highly respected and I am sure he did his duty. It just means that the right hon. Gentleman was not being told.
When did the Secretary of State come into this matter? There is a report in today's Scottish Daily Press to the effect that a spokesman of U.C.S. stated that a letter was sent to the Secretary of State in May. He denied that a message had gone to him and then U.C.S. replied that it was a letter that had been sent to him.

They may have denied that now. It is surprising that the right hon. Gentleman will accept that a letter came to him. From my experience of the U.C.S. when I was Secretary of State, I know that when they sent a letter to the Ministry of Technology they always kept the Scottish Office informed as to the position. I want to know when the Secretary of State was called into consultation.

Mr. Gwynoro Jones: This afternoon.

Mr. Ross: I also want to know what attitude he adopted, because he must be aware of the problem that he has with unemployment in the Glasgow area at present, and he knows very well—he used the figures last night when he and I were on television—that the number of people laid off might be 2,000 in the yard but that for every job in the yard, because this is an assembling industry, there are two or three jobs outside. So 2,000 means nearer 8,000.
Another newspaper today stated the figure as 3,500. We have had no information or indication from the right hon. Gentleman as to what he saw as the future size of this yard and which parts would be affected. There are men, women and children whose livelihood and prospects depend on it.
I spoke today to a young chap who had a wife and three children. He does not know what is ahead of him in a fortnight. Did the right hon. Gentleman realise the enormity of the decision he was taking and the balance he was making? I am sorry that he was not here when I began my speech. He selected his words about profitability much more carefully than he selected his quotation. There were these words, which were obviously misinterpreted by the newspaper reporters, to the effect that Mr. Hepper had failed to give an indication as to when the concern would become a profitable industry. I know that the right hon. Gentleman did not say that, but that was the impression that everybody got.
Did the Secretary of State expect that in a matter of months the concern could not only move into profitability but achieve profitability to such a degree that it could aggregate sufficient funds to pay back the accrued liabilities? This was


asking the impossible. It makes it almost look as if the Government were looking for an excuse to put the Ridley plan into operation.
This is our challenge to the Government. This situation would gravely affect an area already badly afflicted by unemployment. The Secretary of State had the knowledge that his Department had no answers for it. He knew that the unemployment situation would be made worse by this decision. Then the position was that the Government could not or would not because of their political outlook and because of all that had been said about lame ducks prop up industries. The "lame duck" speech was one of the most expensive speeches from the point of view of Britain's reputation that has ever been made. [HON. MEMBERS: "No."] Ask Rolls-Royce. [HON. MEMBERS: "Rubbish."] It is not rubbish. Unfortunately it is fact. This is what was put into the balance against the livelihood and prospect of all these workers.
It is not only U.C.S. This has implications for other yards. The hon. Member for Belfast, East (Mr. McMaster) was right to be concerned, because he knows full well that what has happened to U.C.S. today can happen to Harland and Wolff in Belfast tomorrow.
What about the so-called strong position that Swan Hunter is in—a loss of £6 million this year and a loss of more than £4 million last year?
So we are told that the crutches must be removed. What will be left of our shipbuilding industry? Will not the Secretary of State face the fact about the subsidies and the support which are given elsewhere and realise exactly what they mean to Britain? We shall still need ships. Who will build them? Japan? Germany? It is even suggested that the Government want foreigners to come in and take over what is left of the yards on the Clyde. This is what we are told in relation to the steel industry in Scotland. This is Britain under the new patriots.
They should be ashamed of what they have done. If the Secretary of State for Scotland listened to these discussions in Cabinet and did not oppose this, he is not fit to be Secretary of State for Scotland. Feelings in Scotland are pretty high. The Secretary of State for Scotland said in the

Scottish Grand Committee this morning that he had not had time to read the Scottish papers. It is a great pity that he has not read them. [An HON. MEMBER: "A good job."] Perhaps it is a good job, but it is part of the right hon. Gentleman's job to know what the papers are saying.

Mr. Gorst: rose—

Mr. Ross: So perhaps the Secretary of State is not aware of what the Daily Record and all the other Scottish papers have said. All the Scottish Tories except one absented themselves out of shame today and left the field clear for the failing speeches from such places as Oswestry and Leicester—Common Market and all.

Mr. Gorst: rose—

Mr. Ross: I would gladly give way to a Scottish Tory.

Mr. Gorst: rose—

Mr. Deputy Speaker (Miss Harvie Anderson): Order. The hon. Member for Hendon, North (Mr. Gorst) knows very well that if the right hon. Gentleman does not give way he must resume his seat.

Mr. Ross: I am prepared to listen to the hon. Gentleman when we are talking about his special kind of ships, which are pirate radio ships.

Mr. Gorst: On a point of order, Mr. Deputy Speaker. I understood the right hon. Gentleman to say that he would be giving way.

Mr. Deputy Speaker: The hon. Gentleman knows that that is not a point of order.

Mr. Ross: I said very clearly that I would be prepared to give way to a Scottish Tory. I do not know whether the hon. Gentleman heard me say this, but there was only one of them who had the courage to speak. I do not blame Scottish Tory Members for not being here: they have to suffer the kind of leadership that they have. I do not know for how long it must go on. I can tell them that if the people of Scotland were given the chance every Scottish Tory would be out tomorrow.
I am surprised that the hon. Member for Glasgow, Cathcart (Mr. Edward


Taylor) is still a member of the Government. When it was suggested today by my right hon. Friend the Member for Bristol, South-East that Scottish Tories had been the first to ask for money for U.C.S. there were shouts of complaint and denial by hon. Members opposite. But the one man who did not deny it was the hon. Member for Glasgow, Cathcart. Not only did he ask for money but when he got it he said, "Thank you". When we appreciate that the aim of that quotation which was to be thrown at us all day today was to turn the debate into a debate on a vote of censure on my right hon. Friend the Member for Bristol, South-East, we find it very strange to read what the hon. Gentleman said to my right hon. Friend on 19th June, 1969, when we were faced with a catastrophe and acted to deal with it. He said:
Is the right hon. Gentleman aware that there is great relief on Clydeside that this catastrophe has been averted and appreciation of the time and attention which he has given to this great problem? "—[OFFICIAL REPORT, 19th June 1969; Vol. 785, c. 724.]
The hon. Gentleman is now a member of the Government.
From the time when he heard about the present crisis, how much time and attention did the Secretary of State give to it? He says that 48 hours was all he had. That was all he gave himself to make up his mind and at one stroke we had catastrophe on the Clyde. I assure the right hon. Gentleman that before we are finished I am sure that the whole folly of what has been done will be evident to everybody, including himself. We appeal to him, before that time comes, to change his mind. He has the power to do what he did in the case of Rolls-Royce, and let the Government take over the yards. That is a sensible way to do it.
What has already happened? The right hon. Gentleman would not give £5 or £6 million to U.C.S., but I understand that the liquidator has already asked for £3 million just to keep it going. Then we are to have a restructured company, or something.

Mr. Gorst: Would the right hon. Gentleman nationalise it?

Mr. Ross: Yes. That is what I have said. It is no wonder I do not give way to the hon. Gentleman.
How much will the right hon. Gentleman's policy cost? The right hon. Gentleman will need to supply some initial funds to that new company. What shall we finish up with? We shall finish up with a worsening unemployment situation in Scotland. Craftsmen who know their job—and the right hon. Gentleman said in Glasgow that they know their job, and have a tradition in it—will be unemployed, and there will be a much reduced yard with no guarantee of any further success. That is what the Government have brought the great yards of the Clyde to. I am surprised that the right hon. Gentleman did not resign. The duty of the Secretary of State for Scotland was clear. If he did not oppose the decision, he should resign. If he did. he should not be speaking tonight.

9.27 p.m.

The Secretary of State for Scotland (Mr. Gordon Campbell): This debate has been arranged immediately after the sudden announcements which had to be made yesterday by my right hon. Friend the Secretary of State for Trade and Industry and Upper Clyde Shipbuilders.
Right hon. and hon. Members have given their own versions of the events of the past three years, and have rightly expressed anxiety about the unemployment in the area of Scotland concerned, anxiety which I fully share, which can be the consequence of what has happened.
The consortium named Upper Clyde Shipbuilders, as my right hon. Friend said in opening, was formed as a company in February, 1968.

Mr. James Hamilton: We know all that. Give us the stuff.

Mr. Campbell: It is apparent from the speeches I have heard during the day that some hon. Members were not aware even of those elementary points.
It is a matter of history that at the time there was criticism about whether that was a wise decision, and the Government of the day and the responsible Minister of that time must share responsibility for it.
It was a year later that it became publicly apparent that U.C.S. was in great financial difficulties. Clearly, the then Government, a year after the formation of U.C.S., were deeply involved. The chairman of the company made it clear


that he had been assured that that Government would support the new consortium through difficulties in its first year or two.

Mr. Robert Hughes: This is the opening speech again.

Mr. Campbell: Although there were some critics at the time, it was reasonable that the then Government should feel under some obligation in the early days. What is depressing about today's situation is that U.C.S. has had continuing crises and is still in deep financial difficulties almost 2½ years later.
During those two and a half years I have been continuously concerned with the problems and vicissitudes of U.C.S. As the right hon. Gentleman knows, I was the official Opposition spokesman dealing with the matter. It was I who was impressing upon the right hon. Gentleman the difficulties then facing U.C.S. The right hon. Member for Kilmarnock (Mr. Ross) conveniently forgot that it was I who was pursuing his right hon. Friend in his office in those days to give U.C.S. a decent chance to get started.
Listening to the right hon. Gentleman today, and remembering speaking to him in those days, it is hard to believe that it is the same person who was so uncertain over two years ago about whether to give financial help to U.C.S. I was pointing out then that the Government of the time were under some obligation to help U.C.S. get started, having forced this merger into existence, provided that there was a clear objective of viability in the near future.
Eventually, two years ago, that Government decided to make financial help available, but, clearly, on the basis of early viability. When this first came up in this House on 5th May, 1969, I asked, in a supplementary to my own Private Notice Question, whether the right hon. Gentleman recognised the seriousness of the situation, which had been confirmed by a statement from U.C.S. over that weekend. In reply the right hon. Gentleman said:
…I regard the statement which was made by the Chairman of Upper Clyde Shipbuilders over the weekend as completely irresponsible, because he knew very well that the case was under consideration. By making

that statement he has created a great deal of confusion."—[OFFICIAL REPORT, 5th May, 1969; Vol. 783, c. 37.]
On the following day, 6th May, in a supplementary question after a statement he made, the right hon. Gentleman said:
…we have never accepted and do not now accept that there is a 'safety net' under Upper Clyde Shipbuilders or any other shipbuilding group which entitles those working in these groups to expect that the Government will continue to underwrite losses irrespective of the circumstances."—[OFFICIAL REPORT, 6th May 1969; Vol. 783, c. 275.]
After that crisis, which lasted several weeks, in reply to a further Private Notice Question tabled by me on 9th June, I received a reply from the then Joint Parliamentary Secretary to the Ministry of Technology. His statement included the words
The board "—
that is, the Shipbuilding Industry Board—
also made the offer on the clear understanding that no further funds would be provided to the company under the Act for working capital.
In reply to my supplementary question:
Can the Minister state that the main objective of these proposals is early achievement of viability by the group?
I was told:
To reply to the last part of the question first, I can confirm that that is the principal objective of the whole exercise."—[OFFICIAL REPORT, 9th June, 1969; Vol. 784, c. 967.]
That was over two years ago. Because I was dealing with the difficulties with U.C.S. from the Opposition Front Bench I was well aware that the Labour Government were in two minds as to whether to allow liquidation then. This was no secret to the shipbuilders or the Press. U.C.S. had been in existence for only a year and a half, and it estimated that it could reach early viability provided that it was helped during the first two years. It was reasonable that the Government should have given it a chance.
I now come to what the right hon. Member for Bristol, South-East (Mr. Benn) was saying at that time—[Interruption.] I am replying. The right hon. Member gave his version of events and I did not interrupt him, but I gave him notice that I would give my version later. In his statement he referred to his visits to Glasgow. During one of these, on 6th June, 1969, shortly before the Private


Notice Question to which I have referred, he said:
It is the final offer. There is no question whatsover—I do not want anybody to be under any doubt—there is no question whatsoever of negotiating for increasing in any shape or form the amount of £5 million which I am here to announce today.
This was the right hon. Member for Bristol, South-East, speaking. "It is the final offer", he said. This extract was repeated for those who happened to be listening the day before yesterday by the B.B.C. The statement was reported widely in the Press the day after he made it. As reported in the Daily Express, he said, "Not a further penny".

Mr. Benn: The right hon. Gentleman knows very well the circumstances of that visit, when I said that I was not prepared to offer further money in June but that in the autumn the Shipbuilding Industry Board would consider, in the light of the progress made, what further money should be granted. The right hon. Gentleman knows this well, because the Central Office and the Department have been scouring for quotations. While I had responsibility for U.C.S., at no point did I ever say that no further money would be made available for the yard if it moved towards viability.

Mr. Campbell: No one need have been scouring because, as the right hon. Gentleman knows, I am involved, I remember all this and I have had HANSARDS for months, waiting—

Mr. Benn: rose—

Mr. Deputy Speaker (Sir R. Grant-Ferris): It is a little early in the right hon. Gentleman's speech for the House to be so lively. If it continues to be as lively as it is now, I do not know what I shall do later on. I hope that hon. Members will observe the same moderation for the Secretary of State as they did for the right hon. Member for Bristol, South-East (Mr. Benn).

Mr. Campbell: rose—

Mr. Benn: rose—

Hon. Members: Sit down.

Mr. Deputy Speaker: As an experienced parliamentarian, the right hon. Gentleman knows that if the Secretary of State does not give way he must not persist, and the House must accept that.

Mr. Campbell: rose—

Hon. Members: Give way.

Mr. Campbell: The right hon. Gentleman has conveniently forgotten that I was personally involved two years ago, and I have kept a record of everything that I have been concerned with.
What did the right hon. Gentleman expect to gain by his visits to Glasgow? Did he expect those who were listening to him to believe him when he used those emphatic words? Did those who were listening to him in Glasgow really believe him? If they did not, the whole purpose of his visit and his speech was nullified. If they did believe him, that credibility must have been completely destroyed when five months later he announced the loan of a further £7 million. His speech in Glasgow may have seemed to have been what a "whizz kid" should be doing, but I can tell the right hon. Gentleman, if others did not tell him at the time, that the effects of his visits to Glasgow were the opposite of what he intended, and were in the result almost disastrous. Perhaps because of his own peculiar style of doing things, with always a throng of journalists and photographers around him, he was not taken seriously.

Mr. Benn: rose—

Mr. Campbell: I have given way, Mr. Speaker, and the right hon. Gentleman made a long intervention. Those whom the right hon. Gentleman addressed in Scotland assumed that he was acting out some charade for his personal satisfaction. On the other side, there were several journalists during the days of Government shilly-shallying in May and June, 1969—

Mr. Robert Hughes: On a point of order, Mr. Deputy Speaker. Is it in order for a Minister to reply to a debate from a prepared typescript?

Mr. Deputy Speaker: Ministers replying to a debate may do so in whatever way they wish.

Mr. Campbell: I thought the hon. Member for Aberdeen, North (Mr. Robert Hughes) had been in the House longer than that. As I was saying—

Mr. Heffer: On a point of order, Mr. Deputy Speaker. Whilst it is true that a


Minister or anyone else can reply to a debate in his own way, is it not nevertheless wrong for hon. Members to read speeches in this House? Is it not an insult to hon. Members after a serious debate that a prepared statement should be given by a so-called Minister of the Crown?

Mr. Deputy Speaker: I think the hon. hon. Member and the whole House realise perfectly well what is the custom of the House. Speakers from the two Front Benches are, by custom of the House, allowed to refresh their memories from copious notes. No one has yet sought to define exactly what that means. The House in its good sense knows that the right hon. Gentleman is perfectly in order in doing what he is doing.

Mr. Campbell: The right hon. Gentleman does not like having his memory refreshed with the exact words he used two years ago. In criticising my right hon. Friend the Secretary of State for Trade and Industry, the right hon. Gentleman referred to social and regional policies. Did he have social considerations and regional policies in mind in Glasgow in June when he said that this was the final offer? He was having to face then a somewhat similar situation, but in the early days, when there was hope of viability. [HON. MEMBERS: "Reading."] Hon. Gentlemen seem to want to be childish and silence this debate. Unfortunately, two years later we are back to square one. Viability seems even more distant now than it did then. None the less, the right hon. Gentleman in June, 1969, was stating that this was the final offer. Does he accept that this was consistent with his regional responsibilities.?
The right hon. Gentleman referred to the difficulties in which U.C.S. again found itself last October and alleged that U.C.S. was not informed by the Government at that time that the credit guarantees were being withheld. I can refute this allegation completely. The chairman of U.C.S. was notified at a meeting on 27th October before any credits were withdrawn.

Dr. Dickson Mabon: Why was not Parliament told?

Mr. Campbell: The hon. Gentleman should be patient and wait for what I

shall say. The hon. Gentleman appears to criticise the fact that the guarantees were withdrawn and that this had not been announced to the House, but surely if the former Minister of Technology had made an announcement of this kind, it would simply have made things more difficult by undermining confidence by his statement.

Mr. Douglas: rose—

Mr. Campbell: When the former Minister of Technology made statements to the House, he underlined the importance of discretion in these matters and we cooperated with him, but his own style of operating in this instance with the maximum of personal publicity does little to help. [HON. MEMBERS: "Answer the debate."]
It has been suggested that U.C.S. had made progress in productivity during the past year. [An HON. MEMBER: "You are worse than Davies."] I must remind the House of the facts. I understand that since February there has been some improvement in throughput of steel, but wage costs per ton of steel have remained about the same owing to wage increases. Only last October U.C.S. had one of its most shattering unofficial strikes. In addition, the managing director was reported in the Glasgow Herald on 7th October as saying that there had been a serious deterioration in productivity by steel workers since the holidays. That newspaper on the same day in a leading article headed "Death wish" said:
The death-wish of the boiler-makers at U.C.S. comes closer and closer to fulfilment. No shipyard, in the present state of competition for orders and narrow profit margins, could long afford to be closed down. The action of the boiler-makers would be less culpable (though it would still be irresponsible) if they had held their hand until all the agreed negotiating procedures had been completed and had waited for their union to declare an official strike … Instead, they walked out after only a month of negotiations, leaving the management, their colleagues in other trades, and their union officials to pick up the pieces.
That was only last October. Therefore, it is misleading to speak about a completely changed situation during the past year.
The right hon. Member for Bristol, South-East even raised the question of using the I.R.C., as if the Government were in some way to blame because it


is not now available. [An HON. MEMBER: "What a farce!"] I would point out that throughout the period of difficulty when he was Minister he never brought in the I.R.C. That was a typically irrelevant point which is a convenient attitude to take now when Labour are out of office.
Those who were greatly concerned to promote the interests of shipbuilding in Scotland were worried as to the time when U.C.S. would become viable and turn the corner. Two years ago it seemed that this could happen during last year. After reorganisation at the beginning of this year it was hoped that the way would now be clear. Last week's news was about the most depressing and sudden news that any Secretary of State for Scotland could receive; namely that the company had no alternative but to appoint an immediate provisional liquidator. Moreover, the accompanying information indicated that it was not in the kind of difficulties which could have been assisted by a bridging loan. The trouble went deeper than that. Whatever attempts have been made to maintain confidence, the problem of viability had receded into the distance.

A question was asked about moving into profitability. I regret to say that each time the company has come for assistance, there have been the most solemn assurances that if it were only to get it, it would become profitable, always at some future date. I am not sure what is meant by this latest assertion about the company nearing immediate profitability. The proposition that was put to my right hon. Friend was that it was insolvent but hoped that it could get solvent again if the Government were prepared to provide £5 to £6 million as grant for equity, not as loan, and if its creditors would accept 33p in the £, which would have meant a further £5 million to them. All this was on the basis that there would be no further supply or labour problems of the kind that had beset the company. Even then, because of its heavy accrued debts, the board could give my right hon. Friend no promise when the company would be solvent again. I understand that the provisional liquidator has this afternoon said that the company owes its creditors £28 million.

Questions have been raised about the suddenness of this last crisis and the

short notice given to the Government. There was an extraordinary story in the Press, to which the right hon. Member for Kilmarnock referred, to the effect that on 9th May I had received advance notification of U.C.S. being in urgent financial difficulties. I have looked up that date. I find that it was a Sunday when, although I had a lot of desk work to do, I otherwise did little except go to church. No message was passed to me in church or by telephone. Further inquiries indicate that the origin of this story has nothing to do with me. I hope, therefore, that it can now be buried.

My ear has been so attuned over the past 2½ years to troubles arising at intervals at U.C.S., both when I was in Opposition and since being in Government, that I could not have failed to respond instantly to any message of that kind. None came, and I, like others, hoped that U.C.S. was turning the corner into a viable future.

This story may have been a reference to a letter dated 3rd May from the company to the Department of Trade and Industry. This letter forwarded the management's monthly budget accounts up to mid-March and indicated that trading results showed a most encouraging trend but that the cash position continued to be acutely difficult. There was no hint in that letter, or in letters received during May from the company's auditors, of any serious change for the worse. The cash position had been difficult for some time and the statement that it continued to be acutely difficult did not suggest any great change.

A new overall profit prediction was commissioned by the board of the company on 7th May, but it was not completed until 7th June. It was examined by the board on that day and the chairman confirmed, at a meeting with the Shipbuilding Industry Board on 8th June, that he did not appreciate until 7th June that the situation was reaching a crisis point. The right hon. Member for Kilmarnock asked when I was informed. The answer is: Wednesday last, the day on which my right hon. Friend the Secretary of State for Trade and Industry was informed of this crisis situation.

The increase in unemployment which must follow, however much we can


reduce and mitigate its effects, is the last thing that we would wish. As my right hon. Friend has announced, the Government are immediately making funds available to pay wages for at least a further week, and will seek the cooperation of the provisional liquidator in the reconstruction. There should be no immediate closure of yards. The Government's aim in working with the provisional liquidator will be to keep going the work on ships and the parts of U.C.S. which can be expected to have a viable future. In this way as many jobs as possible will be preserved and the position of suppliers assisted. This is the constructive operation on which the Government, at very short notice, are concentrating all their efforts.

Dr. Dickson Mabon: Despite what we were led to believe earlier, are we now to understand that the Government are paying wages for only one week, not eight weeks? Will the right hon. Gentleman confirm that, because he has made a most serious announcement?

Mr. Campbell: We have undertaken to pay wages for at least one week, and we are immediately getting in touch with the provisional liquidator who took office only today.
A number of hon. Members referred to the assistance which some other countries give to their shipbuilding industries, and gave the impression that little, if anything, was done in this country. I must point out that there are credit guarantees for United Kingdom shipowners ordering from United Kingdom yards, there is shipbuilders' relief—

Mr. Douglas: rose—

Mr. Campbell: I am answering points raised during the debate, and I hope that the hon. Gentleman will not interrupt me at this stage.

Mr. Douglas: rose—

Mr. Speaker: Order. The hon. Member must sit down unless the Minister gives way.

Mr. Douglas: rose—

Hon. Members: Sit down.

Mr. Speaker: Order. I have told the hon. Member that unless the Minister gives way he must resume his seat. The Minister has not given way.

Mr. Campbell: I do not intend to give way to the hon. Gentleman.
There is shipbuilders' relief—2 per cent. of contract price of ship as a tax rebate, and duty-free entry for materials and equipment. Assistance through the board has amounted to £20 million in grants, and £32½ million in loans since 1967. Other assistance is available not confined to shipbuilding; for example. Local Employment Acts, and export credit guarantees. That must be stated for the record.

Mr. Douglas: On a point of order, Mr. Speaker. Is it in order for the right hon. Gentleman continually to evade points that have been put to him during the debate? I put to him the point—

Mr. Speaker: Order. The content of a speech cannot possibly be a point of order.

Mr. Campbell: The right hon. Gentleman mentioned some shipyard figures of recent times, but he did not mention some of the experiences of a previous Government. For example, they allowed the Firth of Clyde dry dock to fail. When that company went into liquidation, the Government provided the provisional liquidator with a small, short-term loan.

Mr. Ross: rose—

Mr. Campbell: No.
Also, they did nothing at all about the Burntisland Shipyard, which again they allowed to fail. They gave no financial assistance whatsoever to it.
The worst aspect of what has happened so suddenly is the increase in unemployment, and I deplore the effects of this on the men and their families and the human problems involved, but some of the figures given in the Press have been greatly inflated. Figures of 30,000 extra unemployed can be based only on the assumption that every man who works at U.C.S. and for every supplier will be out of a job. That, I am glad to say, is most unlikely, and, therefore, such figures are misleading.
This debate was arranged immediately to debate what has happened, and, with the suddenness of the emergency and


with the provisional liquidator taking up his appointment only today, it is possible only to state our intentions to assist him in the reconstruction of the shipbuilding industry on the Upper Clyde.
If this Adjournment debate is to be regarded as a Motion of censure, as the right hon. Member for Bristol, South-East suggested in opening the debate, it must be a Motion of censure on himself and his colleagues. By his own words in this House and outside, when he was the responsible Minister, he set objectives which he is now contradicting or abandoning. The only doubt in my mind is whether the right hon. Gentleman has been guilty of double talk or double dealing. The history of this company has raised formidable problems for Governments from time to time. In the early

stages the previous Government were in great doubt about what to do. It is arrogance and hypocrisy for the Opposition now to criticise in the way they have the immediate and constructive action that we are taking.

Mr. Speaker: For the sake of the record I ought to add a proviso to the Ruling that I gave a moment ago to the hon. Member for East Stirlingshire (Mr. Douglas). I said that there could be no point of order about the content of a speech. That is so provided that the speech itself is within order, and the right hon. Gentleman was in order.

Question put, That this House do now adjourn:—

The House divided: Ayes 261, Noes 288.

Division No. 376.]
AYES
[10.0 p.m.


Abse, Leo
Davis, T. A. G. (Bromsgrove)
Horam, John


Albu, Austen
Deakins, Eric
Houghton, Rt. Hn. Douglas


Allaun, Frank (Salford, E.)
de Freitas, Rt. Hn. Sir Geoffrey
Huckfield, Leslie


Allen, Scholefield
Delargy, H. J.
Hughes, Rt. Hn. Cledwyn (Anglesey)


Archer, Peter (Rowley Regis)
Dell, Rt. Hn. Edmund
Hughes, Mark (Durham)


Ashley, Jack
Dempsey, James
Hughes, Robert (Aberdeen, N.)


Ashton, Joe
Doig, Peter
Hughes, Roy (Newport)


Atkinson, Norman
Dormand, J. D.
Irvine, Rt. Hn. SirArthur (Edge Hill)


Bagier, Gordon A. T.
Douglas, Dick (Stirlingshire, E.)
Janner, Greville


Barnes, Michael
Douglas-Mann, Bruce
Jay, Rt. Hn. Douglas


Barnett, Joel
Driberg, Tom
Jenkins, Hugh (Putney)


Beaney, Alan
Duffy, A. E. P.
Jenkins, Rt. Hn. Roy (Stechford)


Benn, Rt. Hn. Anthony Wedgwood
Dunn, James A.
John, Brynmor


Bennett, James (Glasgow, Bridgeton)
Dunnett, Jack
Johnson, Carol (Lewisham, S.)


Bidwell, Sydney
Edelman, Maurice
Johnson, James (K'ston-on-Hull, W.)


Bishop, E. S.
Edwards, Robert (Bilston)
Johnson, Walter (Derby, S.)


Blenkinsop, Arthur
Edwards, William (Merioneth)
Johnston, Russell (Inverness)


Boardman, H. (Leigh)
Ellis, Tom
Jones, Dan (Burnley)


Booth, Albert
English, Michael
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)


Bottomley, Rt. Hn. Arthur
Evans, Fred
Jones, Gwynoro (Carmarthen)


Brown, Bob (N'c'tle-upon-Tyne, W.)
Faulds, Andrew
Jones, T. Alec (Rhondda, W.)


Brown, Hugh D. (G'gow, Provan)
Fisher, Mrs. Doris (B' ham, Lady wood)
Kaufman, Gerald


Buchan, Norman
Fitch, Alan (Wigan)
Kelley, Richard


Buchanan, Richard (G'gow, Sp'burn)
Fletcher, Ted (Darlington)
Kerr, Russell


Butler, Mrs. Joyce (Wood Green)
Foley, Maurice
Kinnock, Neil


Callaghan, Rt. Hn. James
Foot, Michael
Lambie, David



Ford, Ben
Lamond, James


Campbell, I. (Dunbartonshire, W.)
Forrester, John
Latham, Arthur


Cant, R. B.
Fraser, John (Norwood)
Lawson, George


Carmichael, Neil
Freeson, Reginald
Leadbitter, Ted


Carter, Ray (Birmingh'm, Northfield)
Garratt, W. E.
Leonard, Dick


Carter-Jones, Lewis (Eccles)
Gilbert, Dr. John
Lestor, Miss Joan


Castle, Rt. Hn. Barbara
Ginsburg, David
Lever, Rt. Hn. Harold


Clark, David (Colne Valley)
Golding, John
Lewis, Arthur (W. Ham, N.)


Cocks, Michael (Bristol, S.)
Gourlay, Harry
Lewis, Ron (Carlisle)


Cohen, Stanley
Grant, George (Morpeth)
Lipton, Marcus


Concannon, J. D.
Grant, John D. (Islington, E.)
Lomas, Kenneth


Conlan, Bernard
Griffiths, Eddie (Brightside)
Loughlin, Charles


Corbet, Mrs. Freda
Griffiths, Will (Exchange)
Lyon, Alexander W. (York)


Cox, Thomas (Wandsworth, C.)
Grimond, Rt. Hn. J.
Mabon, Dr. J. Dickson


Crawshaw, Richard
Hamilton, James (Bothwell)
McBride, Neil


Cronin, John
Hamilton, William (Fife, W.)
McCartney, Hugh


Crosland, Rt. Hn. Anthony
Ham ring, William
McElhone, Frank


Crossman, Rt. Hn. Richard
Hannan, William (G'gow, Maryhill)
McGuire, Michael


Cunningham, G. (Islington, S. W.)
Hardy, Peter
Mackenzie, Gregor


Dalyell, Tam
Harrison, Walter (Wakefield)
Mackie, John


Davidson, Arthur
Hart, Rt. Hn. Judith
Mackintosh, John P.


Davies, Denzil (Llanelly)
Hattersley, Roy
McMillan, Tom (Glasgow, C.)


Davies, G. Elfed (Rhondda, E.)
Healey, Rt. Hn. Denis
McNamara, J. Kevin


Davies, Ifor (Gower)
Heffer, Eric S.
Mahon, Simon (Bootle)


Davies, S. o. (Merthyr Tydvil)
Hilton, W. S.
Mallalieu, E. L. (Brigg)


Davis, Clinton (Hackney, C.)
Hooson, Emlyn
Mallieu, J. P. W. (Huddersfield, E.)




Marks, Kenneth
Perry, Ernest G.
Stonehouse, Rt. Hn. John


Marquand, David
Prentice, Rt. Hn. Reg.
Strang, Gavin


Marsden, F.
Prescott, John
Strauss, Rt. Hn. G. R.


Marshall, Dr. Edmund
Price, J. T. (Westhoughton)
Summerskill, Hn. Dr. Shirley


Mason, Rt. Hn. Roy
Price, William (Rugby)
Swain, Thomas


Mayhew, Christopher
Probert, Arthur
Taverne, Dick


Meacher, Michael
Rankin, John
Thomas, Rt. Hn. George (Cardiff, W.)


Mellish, Rt. Hn. Robert
Reed, D. (Sedgefield)
Thomas, Jeffrey (Abertillery)


Mendelson, John
Rees, Merlyn (Leeds, S.)
Thomson, Rt. Hn. G. (Dundee, E.)


Mikardo, Ian
Rhodes, Geoffrey
Thorpe, Rt. Hn. Jeremy


Millan, Bruce
Richard, Ivor
Tomney, Frank


Milne, Edward (Blyth)
Roberts, Albert (Normanton)
Torney, Tom


Mitchell, R. C. (S'hampton, Itchen)
Roberts, Rt. Hn. Goronwy (Caernarvon)
Tuck, Raphael


Morgan, Elystan (Cardiganshire)
Robertson, John (Paisley)
Urwin, T. W.


Morris, Alfred (Wythenshawe)
Roderick, Caerwyn E.(Br'c'n&amp;R'dnor)
Varley, Eric G.


Morris, Charles R. (Openshaw)
Rodgers, William (Stockton-on-Tees)
Wainwright, Edwin


Morris, Rt. Hn. John (Aberavon)
Roper, John
Walden, Brian (B'm'ham, All Saints)


Moyle, Roland
Rose, Paul B.
Walker, Harold (Doncaster)


Mulley, Rt. Hn. Frederick
Ross, Rt. Hn. William (Kilmarnock)
Wallace, George


Murray, Ronald King
Sheldon, Robert (Ashton-under-Lyne)
Watkins, David


Ogden, Eric
Shore, Rt. Hn. Peter (Stepney)
Weitzman, David


O'Halloran, Michael
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Wellbeloved, James


O'Malley, Brian
Short, Mrs. Renée (W'hampton, N. E.)
Wells, William (Walsall, N.)


Oram, Bert
Silkin, Rt. Hn. John (Deptford)
White, James (Glasgow, Pollok)


Orbach, Maurice
Silkin, Hn. S. C. (Dulwich)
Whitehead, Phillip


Orme, Stanley
Sillars, James
Whitlock, William


Oswald, Thomas
Silverman, Julius
Willey, Rt. Hn. Frederick


Owen, Dr. David (Plymouth, Sutton)
Skinner, Dennis
Williams, Alan (Swansea, W.)


Paget, R. T.
Small, William
Williams, Mrs. Shirley (Hitchin)


Palmer, Arthur
Smith, John (Lanarkshire, N.)
Williams, W. T. (Warrington)


Pannell, Rt. Hn. Charles
Spearing, Nigel
Wilson, Rt. Hn. Harold (Huyton)


Pardoe, John
Spriggs, Leslie
Woof, Robert


Parry, Robert (Liverpool, Exchange)
Stallard, A. W.



Pavitt, Laurie
Steel, David
TELLERS FOR THE AYES:


Peart, Rt. Hn. Fred
Stewart, Donald (Western Isles)
Mr. Ernest Armstrong and


Pendry, Tom
Stoddart, David (Swindon)
Mr. Joseph Harper.


Pentland, Norman






NOES


Adley, Robert
Chapman, Sydney
Fowler, Norman


Alison, Michael (Barkston Ash)
Chataway, Rt. Hn. Christopher
Fox, Marcus


Allason, James (Hemel Hempstead)
Chichester-Clark, R.
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)


Amery, Rt. Hn. Julian
Churchill, W. S.
Galbraith, Hn. T. C.


Archer, Jeffrey (Louth)
Clark, William (Surrey, E.)
Gardner, Edward


Astor, John
Clarke, Kenneth (Rushcliffe)
Gibson-Watt, David


Atkins, Humphrey
Clegg, Walter
Giimour, Ian (Norfolk, C.)


Awdry, Daniel
Cockeram, Eric
Gilmour, Sir John (Fife, E.)


Baker, Kenneth (St. Marylebone)
Cooke, Robert
Glyn, Dr. Alan


Baker, W. H. K. (Banff)
Coombs, Derek
Goodhart, Philip


Balniel, Lord
Cooper, A. E.
Goodhew, Victor


Barber, Rt. Hn. Anthony
Cordle, John
Gorst, John


Batsford, Brian
Corfield, Rt. Hn. Frederick
Gower, Raymond


Beamish, Col. Sir Tufton
Cormack, Patrick
Gray, Hamish


Bell, Ronald
Costain, A. P.
Green, Alan


Bennett, Sir Frederic (Torquay)
Critchley, Julian
Griffiths, Eldon (Bury St. Edmunds)


Bennett, Dr. Reginald (Gosport)
Crouch, David
Grylls, Michael


Berry, Hn. Anthony
Crowder, F. P.
Glimmer, Selwyn


Biffen, John
Curran, Charles
Hall, Miss Joan (Keighley)


Biggs-Davison, John
Davits, Rt. Hn. John (Knutsford)
Hall, John (Wycombe)


Blaker, Peter
d'Avigdor-Goldsmid, Sir Henry
Hall-Davis, A. G. F.


Boardman, Tom (Leicester, S. W.)
d'Avigdor-Goldsmid, Maj. -Gen. James
Hamilton, Michael (Salisbury)


Body, Richard
Dean, Paul
Hannam, John (Exeter)


Boscawen, Robert
Deedes, Rt. Hn. W. F.
Harrison, Brian (Maldon)


Bossom, Sir Clive
Dixon, Piers
Harrison, Col, Sir Harwood (Eye)


Bowden, Andrew
Douglas-Home, Rt. Hn. Sir Alec
Haselhurst, Alan


Boyd-Carpenter, Rt. Hn. John
du Cann, Rt. Hn. Edward
Hastings, Stephen


Braine, Bernard
Dykes, Hugh
Havers, Michael


Bray, Ronald
Eden, Sir John
Hawkins, Paul


Brewis, John
Edwards, Nicholas (Pembroke)
Hay, John


Brinton, Sir Tatton
Elliot, Capt. Walter (Carshalton)
Heath, Rt. Hn. Edward


Brocklebank-Fowler, Christopher
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Heseltine, Michael


Brown, Sir Edward (Bath)
Eyre, Reginald
Hicks, Robert


Bruce-Gardyne, J.
Farr, John
Higgins, Terence L.


Bryan, Paul
Fell, Anthony
Hiley, Joseph


Buchanan-Smith, Alick (Angus, N&amp;M)
Fenner, Mrs. Peggy
Hill, James (Southampton, Test)


Buck, Antony
Fidler, Michael
Holland, Philip


Bullus, Sir Eric
Finsberg, Geoffrey (Hampstead)
Holt, Miss Mary


Burden, F. A.
Fisher, Nigell (Surbiton)
Hordern, Peter


Butler Adam (Bosworth)
Fletcher-Cooke, Charles
Hornby, Richard


Campbell, Rt. Hn. G.(Moray&amp;Nairn)
Fookes, Miss Janet
Hornsby-Smith, Rt. Hn. Dame Patricia


Carlisle, Mark
Fortescue, Tim
Howe, Hn. Sir Geoffrey (Reigate)


Channon, Paul
Foster, Sir John
Howell, David (Guildford)







Howell, Ralph (Norfolk, N.)
Money, Ernle
Speed, Keith


Hunt, John
Monks, Mrs. Connie
Spence, John


Hutchison, Michael Clark
Montgomery, Fergus
Sproat, lain


Iremonger, T. L.
Morgan, Geraint (Denbigh)
Stainton, Keith


Irvine, Bryant Godman (Rye)
Morgan-Giles, Rear-Adm.
Stanbrook, Ivor


James, David
Morrison, Charles (Devizes)
Stewart-Smith, D. G. (Belper)


Jenkin, Patrick (Woodford)
Mudd, David
Stodart, Anthony (Edinburgh, W.)


Jennings, J, C. (Burton)
Murton, Oscar
Stoddart-Scott, Col. Sir M.


Jessel, Toby
Neave, Airey
Stokes, John


Johnson Smith, G. (E. Grinstead)
Nicholls, Sir Harmar
Stuttaford, Dr. Tom


Jopling. Michael
Noble, Rt. Hn. Michael
Sutcliffe, John


Joseph, Rt. Hn. Sir Keith
Normanton, Tom
Tapsell, Peter


Kaberry, Sir Donald
Nott, John
Taylor, Sir Charles (Eastbourne)


Kimball, Marcus
Onslow, Cranky
Taylor, Edward M.(G'gow, Cathcart)


King, Evelyn (Dorset, S.)
Oppenheim, Mrs. Sally
Taylor, Frank (Moss Side)


King, Tom (Bridgwater)
Orr, Capt. L. P. S.
Taylor, Robert (Croydon, N. W.)


Kinsey, J. R.
Osborn, John
Tebbit, Norman


Kirk, Peter
Owen, Idris (Stockport, N.)
Temple, John M.


Knox, David
Page, Graham (Crosby)
Thatcher, Rt. Hn. Mrs. Margaret


Lambton, Antony
Page, John (Harrow, W.)



Lane, David
Parkinson, Cecil (Enfield, W)
Thomas John Stradling (Monmouth)




Thomas, Rt. Hn. Peter (Hendon, S.)


Langford-Holt, Sir John
Percival, Ian
Thompson, Sir Richard (Croydon, S.)


Legge-Bourke, Sir Harry
Pike, Miss Mervyn
Trafford, Dr. Anthony


Le Marchant, Spencer
Pink, R. Bonner
Trew, peter


Lewis, Kenneth (Rutland)
Pounder, Rafton



Lloyd, Rt. Hn. Geoffrey (Sut'n'C'dfield)
Powell, Rt. Hn. J. Enoch
Tugendhat, Christopher


Longden, Gilbert
Price, David (Eastleigh)
Turton, Rt. Hn. Sir Robin


Loveridge, John
Prior, Rt. J. M. L.
van Straubenzee, W. R.


Luce, R. N.
Proudfoot, Wilfred
Vaughan, Dr. Gerard


McAdden, Sir Stephen
Pym, Rt. Hn. Francis
Waddington, David


MacArthur, Ian
Quennell, Miss J. M.
Walder, David (Clitheroe)


McCrindle, R. A.
Raison, Timothy
Walker, Rt. Hn. Peter (Worcester)


McLaren, Martin
Ramsden, Rt. Hn. James
Walker-Smith, Rt. Hn. Sir Derek


Maclean, Sir Fitzroy
Redmond, Robert
Wall, Patrick


McMaster, Stanley
Reed, Laurance (Bolton, E.)
Ward, Dame Irene


Macmillan, Maurice (Farnham)
Rees, Peter (Dover)
Warren, Kenneth


McNair-Wilson, Michael
Renton, Rt. Hn. Sir David
Weatherill, Bernard


McNair-Wilson, Patrick (New Forest)
Rhys Williams, Sir Brandon
Wells, John (Maidstone)


Maddan, Martin
Ridley, Hn. Nicholas
White, Roger (Gravesend)


Madel, David
Ridsdale, Julian
Whitelaw, Rt. Hn. William


Maginnis, John E,
Roberts, Michael (Cardiff, N.)
Wiggin, Jerry


Marples, Rt. Hn. Ernest
Roberts, Wyn (Conway)
Wilkinson, John


Marten, Neil
Rossi, Hugh (Hornsey)
Wolrige-Gordon, Patrick


Matter, Carol
Rost, Peter
Wood, Rt. Hn. Richard


Maude, Angus
Royle, Anthony
Woodhouse, Hn. Christopher


Maudling, Rt. Hn. Reginald
Russell, Sir Ronald
Woodnutt, Mark


Mawby, Ray
Scott, Nicholas
Worsley, Marcus


Maxwell-Hyslop, R. J.
Sharpies, Richard
Wylie, Rt. Hn. N. R.


Meyer, Sir Anthony
Shaw, Michael (Sc'b'gh &amp; Whitby)
Younger, Hn. George


Mills, Peter (Torrington)
Shelton, William (Clapham)



Mills, Stratton (Belfast, N.)
Simeons, Charles
TELLERS FOR THE NOES:


Mitchell, Lt.-Col. C. (Aberdeenshire, W)
Sinclair, Sir George



Mitchell, David (Basingstoke)
Skeet, T. H. H.
Mr. Jasper More and Mr. Hector Monro.


Moate, Roger
Smith, Dudley (W'wick &amp; L'mington)



Molyneaux, James
Soref, Harold

BUSINESS OF THE HOUSE

Ordered,
That the Immigration Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Humphrey Atkins.]

IMMIGRATION BILL

As amended (in the Standing Committee), considered.

New Clause 1

POWER TO EXTEND TO ISLANDS

Her Majesty may by Order in Council direct that any of the provisions of this Act shall extend, with such exceptions, adaptations and modifications, if any, as may be specified in the Order, to any of the Islands; and any Order in Council under this sub-section may be varied or revoked by a further Order in Council.—[Mr. Sharpies.]

Brought up, and read the First time.

10.12 p.m.

The Minister of State, Home Office (Mr. Richard Sharpies): I beg to move, That the Clause be read a Second time.
The purpose of the Clause is to give power to extend the Bill in whole or in part, or subject to modifications, to the Channel Islands and the Isle of Man. These powers are similar to those which were contained in the Commonwealth Immigrants Acts of 1962 and 1968, but those Acts do not extend to aliens. In accordance with the normal practice, consultations have been taking place with the Island authorities, and Orders in Council will be made under the new Clause only with the agreement of the Island authorities. This follows very closely, as the hon. Member for Leeds, South (Mr. Merlyn Rees), will know, the precedent set in the existing legislation.

10.15 p.m.

Mr. Merlyn Rees: The Minister of State has given us a brief explanation why the Clause has been tabled at this late stage. I have one or two questions. It was a little difficult to hear the hon. Gentleman's full argument.

On Clause 1(3), Clause 9 and Schedule 4 we dealt with matters appertaining

to the Islands. We are intrigued why at this late stage the Government have tabled the Clause. At these three earlier stages there were a number of discussions, but nothing was then mentioned. I heard the hon. Gentleman say just now that the previous Administration had had discussions on similar points. If it was so obvious that this be done, why has it been left until now to do so?

Why is it being done by Order in Council? It could have been done by Ministerial Order, but this may be a technical point. We had a discussion on these matters as to whether—we are now dealing with the Islands—Parliament should not have a chance, when dealing with the question of the common travel area, of debating the matter and holding the Government accountable for any major change, if matters are to be changed in the Channel Islands and in the Isle of Man, or if the rules pertaining to immigration are to be changed. Have the Government discovered that if we enter the Common Market they will need the Clause arising from the operation of Article 48 of the Treaty of Rome and the directives which have flowed therefrom?

Mr. Sharpies: By leave of the House I will reply to the points raised by the hon. Member. The Clause has been tabled at this late stage because consultations had to take place with the Island authorities. Those consultations were not complete when the Bill was published.
This is being done by Order in Council because we are following the existing practice under the 1962 Act. Orders in Council are laid only after consultation with the Island authorities.
The point the hon. Gentleman raised about the E.E.C. has no validity. This is simply an extension of the powers under the existing legislation.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 2

PROVISIONS FOR REPRESENTATIONS AND INQUIRY IN RESPECT OF DEPORTATION ORDER

(1) Where the Secretary of State has decided to make a deportation order and no appeal lies by virtue of the provisions of this Act against


such decision, any person aggrieved by such decision may within a period of twenty-eight days (or such longer period as the Secretary of State may allow) of service upon him of notice of the said decision make representations to the Secretary of State against the making of a deportation order.
(2) In any case where such representations are made then unless the Secretary of State certifies that he is satisfied that there are no prima facie grounds for holding an inquiry he shall appoint one or more persons to hold an inquiry and to report to him and pending such report he shall not make the deportation order.
(3) The Secretary of State shall direct whether the inquiry or any part thereof is to be held in private or in the absence of any persons specified by name or description and the person appointed shall comply with such directions.
(4) The person appointed shall report to the Secretary of State and such report shall not be published in whole or in part without the authority of the Secretary of State.
(5) The provisions of paragraph 2 of Schedule 3 to this Act shall apply to a person to whom notice has been given under this section as they apply to a person to whom notice has been given under section 18 of this Act.
(6) A notice given under this section shall inform the person to whom it is given of his rights under this section.—[Mr. S. C. Silkin.]

Brought up, and read the First time.

Mr. S. C. Silkin: I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker (Sir R. Grant-Ferris): With this new Clause the House can discuss also new Clause 5—Representation to chief magistrate on proposal to deport a non-patrial—and Amendment No. 127, in page 14, line 29, leave out subsection (5); and Amendment No. 128, in page 15, line 15, leave out subsection (3); Government Amendment No. 46, plus Amendment No. 95, in page 15, line 20, after 'good', insert:
as being in the interests of national security or of the relations between the United Kingdom and any other country.
Government Amendments Nos. 47, 48 and 49, plus Amendment No. 96, in page 16, line 3, at end insert:
( ) An appeal under this section against a decision to make a deportation order against a person shall be to the Appeal Tribunal in the first instance, instead of to an adjudicator, if the ground of the decision was that his deportation is conducive to the public good; and a person shall not be entitled to appeal against a decision to make a deportation order against him if the ground of the decision was

that his deportation is conducive to the public good as being in the interests of national security or of the relations between the United Kingdom and any other country.";
Government Amendments Nos. 50 and 52, plus Amendment No. 114, in page 16, line 14, leave out 'not'; and Amendment No. 115, in page 16, line 19, at end insert:
'but not if the Secretary of State certifies that he has taken such action in the interests of national security',
Government Amendments Nos. 57, 59 and 91.

Mr. Silkin: This group of Amendments forms a very important part of the discussion that we shall be having at this stage of the Bill. This series of new Clauses and Amendments concerns in one way or another the right of appeal of a person against whom a deportation order has been made on the grounds that the Secretary of State deems his deportation to be conducive to the public good—that is, under the provisions of Clause 3(5)(b). The power to deport on those grounds as set out in the Bill are very wide. Many would contend that the term "conducive to the public good" is so vague and open-ended that it could cover virtually any reasons which a Government might have for disliking the presence of a non-citizen in Britain and of those not enjoying what the Bill describes as the right of appeal. A very strong case could be made for narrowing that power.
We appreciate, however, that it is easier to criticise the width of a power than it is to formulate words which are adequate without being excessive. Therefore, we recognise that the practical solution to the problem is to ensure that those who are subject to the power shall enjoy an adequate right of appeal to an independent tribunal. No such right exists in the Bill as it stands. That was the case we pressed on Second Reading and over many hours in Committee.
The Secretary of State has come some way to meeting us, because his Amendment No. 47 provides for the right of appeal to extend to cases of deportation where the Secretary of State deems it to be conducive to the public good, and his Amendment 49 provides the machinery for the appeal, but in so doing it also provides for limitations upon it. It is the limitations with which we have our first quarrel.
The right of appeal is not to be given by the Secretary of State in three cases which are set out in Amendments Nos. 46 and 49. They are, first, that it is
in the interests of national security";
second, that it is
and third—these are very important
in the interests of … relations between the United Kingdom and any other country";
words—
for other reasons of a political nature ".
We accept that the first two exceptions are understandable, although even in those cases we believe that the mere certificate of the Secretary of State should not deprive the person concerned of all possibility of making his case.
But the third ground for certifying against a right of appeal, as stated in the right hon. Gentleman's Amendment, is as vague and open-ended as the very phrase:
conducive to the public good".
What reasons of a political nature the right hon. Gentleman has in mind which do not fall within the ambit of the interests of national security or relations between this country and another, he will no doubt tell us.
In Committee the Government spokesmen, including the right hon. Gentleman, tended to speak of security grounds and political grounds as interchangeable. If they are, the third category is unnecessary. If they are not interchangeable, grounds must be added which do not fall within the first two. What are they? Let the right hon. Gentleman spell them out clearly and say what sort of grounds he has in mind when he adds those words.
Whatever grounds he has in mind, does not he agree that the words are so wide that they could comprehend the sort of reasons which might appeal to a dictatorial régime but are totally inappropriate to a parliamentary democracy? They are wide and dangerous, and it is no justification for placing on the Statute Book words that are wide and dangerous to say that the right hon. Gentleman does not intend to use his powers in a wide and dangerous way.
That is why in Amendments Nos. 95 and 96 we have sought to exclude those words from the limitation, and we call upon the right hon. Gentleman to accept our limitation on his powers. If he cannot

convince us of the need to retain those words, we shall have the greatest difficulty in accepting the breadth of this certifying power.

Mr. F. P. Crowder: Why are the first two grounds acceptable to the Opposition? There is a right of appeal in everything, so why do the Opposition accept those two grounds? I do not regard them as being acceptable at all, I think that they are wrong. Why should an arbitrary committee or person be entitled to say "No" without an appeal?

Mr. Silkin: No doubt the hon. and learned Gentleman will put that question to his right hon. Friend. We discussed the matter in Committee in great detail. We understand the difficulties of providing a right of appeal if the circumstances are that evidence given before the appeal tribunal must necessarily be taken not only in secret but also not in the presence of the person who is appealing or his representatives. It is because we understand those difficulties that we have been prepared to accept the first two grounds. But we have the greatest difficulty in understanding what the Home Secretary has in mind with the third ground, and the very wide term "other political reasons", and why he finds it necessary to include it.
I come now to the other main point of principle raised by the series of Amendments. We pressed upon the right hon. Gentleman in Committee the need to allow the victim of a deportation order a positive right of representation, even in those cases where we recognise the difficulty of allowing an appeal in a full sense of the term. We felt that even in those cases there must be a proper right to present his case, and we urged something akin to the "three wise men" procedure of the Civil Service, so that we could make as sure as possible that people were not deported on grounds to which they might have given an adequate answer.
The Home Secretary was attracted by that idea. As I understood what he said in Committee, he undertook to make use of independent advice of that kind, although he was not prepared to transfer his own responsibility in such cases to an independent tribunal. He said:
To deal with these cases I had in mind the 'three wise men' procedure. Frankly, I have not made up my mind about the exact


procedure, for I wanted to hear what would be said in the Committee … on the principle that what has worked for the British Civil Service should work pretty well for the alien in these circumstances. I hope that that has met the right hon. Gentleman's point.
He was referring to my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), who replied:
It does, and I am much obliged. If the Home Secretary could, on Report, give us some indication of the way his thinking is going on this, it might help us to shorten the debate.
The right hon. Gentleman replied:
I shall certainly do that."—[OFFICIAL REPORT, Standing Committee B, 20th May, 1971; c. 1127.]
In the light of that undertaking I, having moved an Amendment, obtained the leave of the Committee to withdraw it.
We have now tabled new Clause 2 for two reasons: first, to enable the right hon. Gentleman to make good his promise, so that we can consider and debate the procedure which he has in mind; second, to draw attention to what seems to us to be one of the main difficulties of the kind of procedure he has in mind.
10.30 p.m.
In Committee the right hon. Gentleman objected to any statutory procedure and we accepted, albeit with reluctance, that he genuinely intended to set up some informal "three wise men" procedure. There are obvious difficulties if the procedure is not within a statutory framework, if the right to make representations is not embodied in clearly defined words for all to read. What precisely will the right be if the Secretary of State certifies under this Amendment? How will the person proposed to be deported know what is alleged against him? How will he be informed of his right to make representations to the informal body? What will be that body's rights in respect of obtaining evidence and seeking to carry out its task as impartially as it can?
These are very important considerations, and the right hon. Gentleman will need to satisfy us that they can be met in such a way by an informal, non-statutory procedure that justice is both done and seen to be done. It is essential that that should be so if we are taking away this right of appeal.

New Clause 2 seeks to set out the principal safeguards which we believe are required—the fixed period for making representations after proper notice of his rights has been given to the prospective deportee, a fair consideration of his case followed by a proper report. The right hon. Gentleman will have to show that those requirements will be met and how they will be met if he is to persuade us that there is no need to embody the rights he is prepared to give in the legislation which makes them necessary.

Mr. David Steel: Government Amendment No. 46 is in response to an Amendment which I moved in Committee. I have been looking up what the Home Secretary said then in response to me. He said that he would be willing to table an Amendment to allow appeals in certain cases. I must say that while I accept his views and the reluctant necessity not to have an open appeals system in cases of national security but to leave it instead to the judgment of the Home Secretary, we require some explanation about what is meant by the phrase
reasons of a political nature.
It is an unfortunate phrase to have in legislation. The fact that it is stated in black and white makes it seem more alarming than when the right hon. Gentleman gave his reasonable reply in Committee.
My present inclination is not to support Amendment No. 46 because it seems to be an unfortunate phrase. I hope that the right hon. Gentleman will give the House a clearer explanation about what he has in mind and how on earth that rather vague phrase can possibly be defined in individual cases.
We have returned to the point frequently made in Committee that using phrases like this with the right hon. Gentleman as Home Secretary may be one thing, but using such a phrase not knowing who may become Home Secretary at another point of time is quite another matter. The House has to legislate on the basis of permanence in spite of a shift from one Home Secretary to another, from one party to another. With that in mind I am very unhappy about the proposed wording, although I recognise that it arises from a point raised in Committee.

The Secretary of State for the Home Department (Mr. Reginald Maudling): Two points have been raised: the question of the words "of a political nature" and, secondly, the procedure of advice to the Home Secretary in these cases. The cases involved are special personal cases, not great in number but often important in their implications.
To deal with the phrase first, I do not know why the hon. and learned Member for Dulwich (Mr. S. C. Silkin) thinks it is so dangerous. It is taken from legislation enacted by his own party when in government. It is wording used in the Aliens Appeal Order, 1970, and is based on the recommendation of the Wilson Committee, which was to the effect that there are cases which cannot fall strictly within security considerations nor strictly within considerations of international relations.
At the time that the Wilson Committee was reporting, it had in mind that some political figure from another country with an extreme political view might come over here to make speeches of a kind highly offensive to a particular community. This was why the Government in 1970 put this phrase into that Order, and Parliament accepted it when passing the Order. It would be a rare occurrence, but that was the thinking behind it. There could be cases in which one would think it wise to exclude people on the ground that their presence would cause widespread offence. There is nothing sinister about the words; they are familiar and are copied from the 1970 legislation.
On the matter of appeals, I told the Committee that I would restore the appeal procedure for people already here who had been denied what they might have expected in the way of an extension of stay on the ground that their presence was not conducive to the public interest. The Clause carries out in full the undertaking given in Committee.
There remains the important but rare case of people who have to be excluded or deported on grounds of national security. I said that I was considering introducing a procedure of a non-statutory character to deal with such cases where a Home Secretary has to decide whether it is right in the national interest to exclude certain people from this country

on grounds of security. I said in Committee that this procedure had appeared for some years to have worked satisfactorily in respect of individual civil servants and that it was a good procedure in regard to particular cases. Therefore, I intend to adapt this procedure for those cases and to introduce this with effect from the date of operation of the Bill.
The details of this procedure were announced some while ago in the House by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) who was then Financial Secretary to the Treasury, and who then explained the features of that procedure. I shall explain what we have in mind. All these proceedings start with a personal decision by the Home Secretary on national security grounds. The person concerned is notified of the decision and he will be given by the Home Office such particulars of allegations as will not entail disclosure of sources of evidence. At the same time the person will be notified that he can make representations to the three advisers and will be given time to decide whether or not to do so. The advisers will then take account of any representations made by the person concerned. They will allow him to appear before them, if he wishes. He will not be entitled to legal representation, but he may be assisted by a friend to such extent as the advisers sanction. As well as speaking for himself, he may arrange for a third party to testify on his behalf. Neither the sources of evidence nor evidence that might lead to disclosure of sources can be revealed to the person concerned, but the advisers will ensure that the person is able to make his points effectively and the procedure will give him the best possible opportunity to make the points he wishes to bring to their notice. This is all on the lines of the procedure which has worked for some time in regard to British Crown servants.
There is another point which arises from some remarks made recently by Mr. Wigoder. Since the evidence against a person necessarily has to be received in his absence, the advisers in assessing the case will bear in mind that it has not been tested by cross-examination and that the person has not had the opportunity to rebut it. This is an important point which will be contained in the instructions.
On receiving the advice of advisers the Secretary of State will reconsider his original decision, but the advice given to him will not be revealed. If the person does not wish his case to go to the three advisers, he will be given full opportunity to make representations to the Secretary of State, and the names of the advisers will be made known on their appointment.
This carries out in full, as I said I would do, the procedure which has worked for some time for civil servants involved in a matter of this kind. I recommend it to the House as the best possible system we can adopt in what is inevitably a difficult case. We have to reconcile the needs of national security with the proper rights of the individual to protect himself. It is a better procedure than the statutory device of the Amendment put forward by the Opposition. I am not sure that it is wise to put this in statutory form. In effect, it means importing once again into this matter a justiciable issue, whereas the whole basis of my philosophy is that these are decisions of a political and executive character which should be subject to Parliament and not subject to courts, arbitrators, and so on.

Mr. Elystan Morgan: The Home Secretary mentioned a reference in the Immigration Appeals Procedure Rules of 1960 to the words "of a political nature". I have looked carefully through the rules and cannot find any reference there. Is it an oblique reference in Rule 12(1)(b)?

Mr. Maudling: Article 8 of the Aliens (Appeals) Order, 1970, states:
Where … it appears to the Secretary of State that the decision or action was taken wholly or mainly in the interests of national security or of the relations between the United Kingdom and any other country or otherwise on grounds of a political nature …
We are exactly following precedent. The procedure I have suggested is the best way of handling the difficult problem which we discussed thoughtfully and thoroughly in Committee, and I hope the House will accept the serious Amendment which the Government are putting forward on this point.

Mr. Tom Driberg: Before the right hon. Gentleman sits down, will he say why he considers it right that no legal representation should be allowed to the appellants?

Mr. Maudling: This procedure has worked well with civil servants, and, looking back on the recent case of which we all have knowledge, I feel that there is difficulty if it appears that these decisions are justiciable, legal decisions. They are executive, political decisions, subject to the House of Commons and not to the courts of law.

Mr. Charles Fletcher-Cooke: When I read the Amendment I thought it contained a misprint. I thought that the true wording was:
if the Home Secretary certifies that the appellant's departure from the United Kingdom would be conducive to the public good as being in the interests of national security or of the relations between the United Kingdom and any other country or for other reasons of a non-political nature …
My right hon. Friend has persuaded me that there is a precedent for this remarkable wording in the works of the previous Administration.
I quite understand when my right hon. Friend says that there may be men who wish to come into this country or are already here who will make such nuisances or beasts of themselves by stirring up racial, religious or other hatreds that they must be expelled. I do not think any of us would disagree with that. What I do not understand is this: if they are to be expelled, why should they not have a right of appeal against expulsion? The evidence against them is not so secret and non-disclosable that the special procedure has to be put into operation. Where national security is involved, we all know that the evidence cannot be disclosed even to a tribunal itself sometimes, much less to the man, and much less to his advisers. In those circumstances it seems right that the non-statutory provisions on which my right hon. Friend insists should be adhered to. But if it is not a case of national security—ex hypothesi, this is not a case of national security—why can the man not appeal in the ordinary way? It is very unlikely that his appeal will succeed, but this is no reason for depriving him of the right
10.45 p.m.
I ask in this third and very delicate category of case, which might be abused by Home Secretaries unlike my right hon. Friend, that the normal system of appeal be put forward, because in such cases it is possible for the man to be confronted with the charge against 


and for his advisers and the tribunal to be told the reason for his expulsion; namely, that he is a stirrer-up of trouble and is not wanted here. Why should he not have a chance to produce a case that this evidence is untrue, in the normal way?

Mr. Alexander W. Lyon: I agree with the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) about these political matters. Indeed, in the one example which the Home Secretary quoted in defence of these words one was immediately reminded of the Chicago Seven trial, when one of the accused came across to this country and there was agitation that he should be deported.
In precisely that case, why should he not have been allowed to appeal and say, "Whatever I did in Chicago, and whatever the allegations against me in that trial, which have made me notorious, all I want to do here is act as a tourist, to go around the country and forget about the incidents of the past"? Why should he not then be allowed to put that case before a tribunal? If he convinces a tribunal, the decision should be made in his favour. This seems to me a self-evident human right, and I am surprised that the Home Secretary thinks that it is so implausible that we should rely on the alternative words of the Opposition Amendment.
If by neglect we allowed these words to go through in the Aliens Order, perhaps the right answer is to amend that Order and not to continue to transgress by neglect.

Clause 3(5)(b) contains the words:
if the Secretary of State deems his deportation to be conducive to the public good …".
No other paragraph in that subsection contains the words "the Secretary of State deems", yet all the paragraphs of Clause 15(1)(a), (b) and (c) contain references to the Secretary of State.

If the first words mean that the Secretary of State's decision is final, I do not see how there can then be a right of appeal. If it simply means that in those cases the Secretary of State has to make the decision and it must not be left to one of his officials, I cannot see why there is a reference in Clause 15 to the various powers of the Secretary of State.

I am wondering whether, in putting in this right of appeal now, on the public

good cases, the Home Secretary is not allowing a kind of consultative opinion by the appeal tribunal which would come back to him to be finally decided in the light of that opinion. Will this be a final opinion of the tribunal which can reverse the decision of the Secretary of State, or will it simply be an advisory opinion which he can accept or reject according to his will? Clearly, it would be wrong to allow this right of appeal to be written in when it is only an emasculated right.

Mr. Clinton Davis: Whenever the Home Secretary in Committee indicated that he did not like a right of appeal, he would say that it was not a justiciable matter. Yet the Bill is riddled with inconsistencies. There are some matters which, according to his definition, would not be justiciable where there is a right of appeal.
I entirely endorse the views expressed by the hon. and learned Members for Darwen (Mr. Fletcher-Cooke) and for Ruislip-Northwood (Mr. Crowder) indicating that there should be the widest rights of appeal. I tried to argue that point in Committee, but it was rejected by the majority of hon. Members.
The right hon. Gentleman is now taking upon himself a power which is far wider than anything we debated in Committee. He may or may not be a liberal Home Secretary—I do not know—but he will not be Home Secretary for all time. It is clear that this wide power could easily be abused. It means, in effect, that civil liberties in this country can be eroded all too easily. Therefore, Parliament must look carefully at this kind of legislation.
The right hon. Gentleman justified his argument by saying that it was already in the Aliens Order. That is not good enough. The mere fact that a mistake may have been made in the past is no reason for perpetuating it.
I believe that we have to be vigilant about ensuring that people who come to this country and against whom serious allegations are made are entitled to make their own representations to try to rebut such allegations if they so desire. It is noteworthy 'that under these proposals legal representation is not granted to these people. The situation is similar to that which prevails before National Health Service tribunals, where serious


allegations can be made against doctors and they are allowed to be represented not by a lawyer but by a friend. The situation is such that an inarticulate person against whom serious allegations are made is quite incapable of presenting his case adequately.
When allegations of a serious nature are being made which could affect a person's livelihood elsewhere, why should he be denied proper representation in this country? What right is being denied to the Home Secretary in this regard? How will it affect the security of this country for a man to have his case properly represented, witnesses properly cross-examined, and so on? I submit that the right hon. Gentleman's arguments are hardly worth consideration.

Mr. Crowder: Is it not important that that anybody who has a case should have the opportunity in this country, which is still meant to be a free country and a democracy, of having it put in the best possible light, even if he has to pay for doing it? Why should that be denied by Whitehall and the Treasury? In my view, that is disgraceful. I should like to hear the hon. Gentleman's views.

Mr. Davis: I entirely endorse everything that the hon. and learned Gentleman has said. I think he really expected me to say that. We have heard nothing from the right hon. Gentleman which has demolished that argument. The whole burden of proof must rest fairly and squarely on him. It is no use the right hon. Gentleman presenting a benevolent front and hoping that he will get away with it. I am delighted to see that there is grave disquiet on both sides about this, and it is right that the House should present this front to the right hon. Gentleman.

New Clause 5 is designed simply to mitigate a situation in which a right of appeal would not normally exist. It is limited because I realise that the Home Secretary will not give way on the question of security. It merely recreates the situation, in certain limited instances which existed prior to 1969, under which an alien who had been resident here for more than two years and whom the Home Secretary proposed to deport other than on security grounds or on the recommendation of a court could

make recommendations to the Chief Magistrate.

This was dealt with in the Wilson Report, paragraph 53 of which outlined the procedure that had to be undertaken by the Home Secretary. It was an administrative procedure and it was in accordance with Article 3(2) of the European Convention on Establishment of 1955. Under that arrangement the alien could be represented at the hearing, could cross-examine witnesses and call witnesses in rebuttal of the Home Secretary's statement of the facts.

Then the Chief Magistrate made a recommendation which the Home Secretary could either reject or accept, and it so happens that, to my knowledge, in every instance the Home Secretary has accepted the recommendation. It provided the alien who had been here for two years, in these very limited circumstances, with some right, some entitlement and some belief that this country still stood for justice. This is what my hon. Friends and, I believe, a number of hon. Gentlemen opposite are anxious to see continue, and I therefore hope that the right hon. Gentleman's proposal will be rejected.

Mr. John Mendelson: I ask the Home Secretary to clear up two points that were discussed a great deal in the national Press and particularly in reputable newspapers at the time of the case about which we all know and to which the right hon. Gentleman referred.
I felt that the suggestion that if the tribunal came to a conclusion different from that of the Home Secretary, the right hon. Gentleman would have to resign was completely and totally absurd. I could never understand why that suggestion was made at the time. I thought that the advantage of an orderly legal procedure involving the tribunal and the right of legal representation, rightly urged by my hon. Friend the Member for Hackney, Central (Mr. Clinton Davis), lay in the fact that the Home Secretary could accept the decision of the tribunal as being the view of a neutral body, and that his political position as a Minister of the Crown was not in question.
11.0 p.m.
Under the procedure which the right hon. Gentleman now proposes—which, he


argues, will make it an administrative matter which will be entirely within the authority of the House of Commons—the advice he receives will remain completely secret. He is reversing the previous position, and not for the better. Obviously, if he reports a decision to the House of Commons, it is ipso facto entirely a political matter. If the House, by a majority, were to challenge his announcement and were to come to a different conclusion, resignation would be inevitable. But the advantage of the procedure which he now rejects lies precisely in the direction of avoiding any such necessity.
I thought that the right hon. Gentleman expressed some doubt a moment ago when I said that I thought it totally absurd that the newspapers should have suggested that he must resign if the tribunal came to a different decision in the case. I cannot see why a Home Secretary, who generally has the support of the House, is generally regarded as a Home Secretary who is properly doing his job and carrying out his functions and is constantly sustained by a majority in the House, should be obliged to resign because in one particular case a tribunal finds against him. I should have thought that such a Home Secretary could then accept the tribunal's decision in that one case. There is no assumption in the constitution, written or unwritten, that the Home Secretary must be infallible, nor that a Home Secretary cannot be proved to have been wrong in a particular case.
Since I have been a Member of the House, under various administrations, a deportation has sometimes been brought to the notice of the House and the Home Secretary in office at the time by an hon. Member. Normally it is a very urgent situation, as the right hon. Gentleman will recall from some of the cases which have occurred. I have in mind particularly a case during the period when Lord Butler was Home Secretary. On those rare occasions it all depended on the timing. Very often the first demand that the hon. Member would put to the then Home Secretary would be for a stay of execution. The first request would be, "Do not do anything until the debate has taken place. As Home Secretary, commit yourself to wait 48 hours "—or even a week, as the case may be. I refer to the famous case of the Spanish sailor and

to the case of one immigrant from a Commonwealth country who had been here for some time.
I thought that it was an improvement to have the orderly procedure of a tribunal, because the tribunal procedure did not make it dependent upon the timing that allowed an hon. Member to bring up a case and made certain that in all those cases in which an appeal was lodged to the tribunal and the person concerned had proper legal representation the House need not worry because it would always be certain that the machinery was available and it would only at a very much later stage, when the result was known, have to consider how the procedure worked.
My hon. Friends have made a very powerful case to put the burden of argument upon the right hon. Gentleman—he has not said too much in introducing his case this evening; perhaps he is reserving it to reply to the debate—to say much more about why he rejects the tribunal procedure and legal representation. My intervention is designed to see whether he can agree that there is no value in being obliged to resign if the tribunal turns against him in one particular case, and whether he could clear up a doubt in my mind whether his fear that a tribunal may turn against him has turned him against the tribunal procedure. If that had anything to do with it, he ought to put it out of his mind. He could get broad agreement in the House and in the country that there would be no need for resignation in such cases, and a matter could become far less political.
While nobody likes an opinion going against him, especially when one is in charge of a great Department of State, none the less it would have no constitutional consequences requiring resignation. If the right hon. Gentleman accepts that part of my argument, can he not see his way to accepting the kind of case proposed by my hon. Friend?

Mr. Arthur Davidson: The Home Secretary cannot expect to include
for other reasons of a political nature
in an Amendment and let it pass observation by this House, and pass without debate.
With great respect to the right hon. Gentleman, he has not convinced me that there is any good reason why this phrase should be included in the Amendment at all. I am not the slightest impressed by the statement that it was included in other legislation. If it was it should not have been there at all—

Mr. David Steel: The hon. Member is using the phrase "in other legislation", but this was taken from an Order and Orders are not subject to the line-by-line examination by the House which the House has a duty to undertake on a Bill. That was delegated legislation. We have a higher responsibility for this Bill not to let in what was in an Order.

Mr. Davidson: I used the word "legislation" because I wanted as wide and as ambiguous a phrase as possible. I am not sure what that Order was, but I am grateful to the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) for drawing that to my attention.
If the Home Secretary feels, for whatever reason, that it is vital and necessary that this phrase should be in, I agree entirely with the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) who asked why there should not be a right of appeal against the Home Secretary.
The right hon. Gentleman has rightly given a right of appeal in cases where he makes an order on grounds of a person's presence not being conducive to the public good, as in cases of brothel keeping or some illegal activity. If he is prepared to give a right of appeal in cases of that nature, why is he not prepared to give it in cases of a political nature? I cannot see the evil which can be experienced by having an appeal hearing in those cases.
The right hon. Gentleman seems to think that the presence here of some person stirring up race hatred is of such nature that he should be got rid of. I agree. Of course he should. I would have thought that possibility was conduct which would be in the category of his presence
not being conducive to the public good".
If he has been indulging in that kind of activity, it is not likely that that sort of activity could affect the security of the State, and if it does affect the security of the State, the Home Secretary has got him

on other grounds, anyway. This is not only menacing; it is unnecessary.
If this is to be put in, the Home Secretary should consider a right of appeal with proper legal representation.

Mr. Sydney Bidwell: The Secretary of State, in trying to pick up the trend of the argument in Committee, has made the thing much worse by the wording of his Amendment, brought in from an Order applicable to aliens legislation. As it is at present, and as the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) has pointed out, correctly, there is a difference, as between chalk and cheese, in the way in which they are subject to parliamentary scrutiny.
The Home Secretary has built up a reputation for being a kind of liberal Conservative. I accept that he is a liberal on Home Office matters. I think that this is largely the result of confusion. It seems that the right hon. Gentleman has not applied his mind sufficiently penetratingly to the situation. It seems that on this question, about which there is such grave disquiet on both sides, the right hon. Gentleman has not fully realised the massive changes which go hand in hand with the conception of "of a political nature".
These words, extracted from an Order applicable to aliens, will become applicable to a widely extending range of people who can be deemed to be non-patrial. The words will apply henceforth to citizens of the Commonwealth who will be coming here not exactly on alien terms, although that is what many right hon. and hon. Members opposite believe according to the fifth-rate argument we heard from the back benches in Committee from people who are under a duty to examine the Bill. I imagine that the area of ignorance on this question is much wider in the House as a whole, and particularly amongst hon. Members opposite
Henceforward, Commonwealth citizens under restricted work permits are to come here to work under restrictive law—first for a year on probation and then, if they are lucky, after a further period with the possibility of the right of abode. All that time they are to have voting rights. They are to have, in a sense, citizens 'and non-citizens' rights. That is the muddle the Government have got themselves into.


They are increasing the muddle by using terms like this. We pointed out in Committee and on Second Reading that a Commonwealth citizen here on restricted work permit conditions and with citizen's rights could become a Member of the House.
Under the terms of the Government Amendment, workers could have a restricted right of employment but not a restricted right of participation in the democratic processes and could become members of a local authority or be justices of the peace, as so many have in the past. This is an Immigration Bill, not a deportation Bill. Is it any wonder that idiotic proposals such as these do nothing but increase the existing fears amongst the immigrants who are already here?

11.15 p.m.

Mr. James Callaghan: My hon. Friend the Member for Southall (Mr. Bidwell) is probably correct in saying that there is a feeling of disquiet in the House about this matter. I should like to trace it as dispassionately as I can and see whether I fully understand what it is about. It is very complicated. As an Order passed during the lifetime of the Labour Government has been prayed in aid by the Home Secretary, I should like to see what we are discussing and whether my understanding is correct.
I have been thinking about this and looking it up whilst I have been listening to the debate. As I understand it, the whole matter started with the Report of the Wilson Committee—Cmnd. 3387—paragraphs 143 and 144 of which contained a recommendation. Paragraph 143 stated:
Cases arise from time to time in which the Home Secretary feels justified in excluding a person from this country, or requiring him to leave, on grounds that are essentially of a political nature—for example, that his presence here is or would be harmful to international relations, or offensive to public opinion.
It then put both sides of the case:
We doubt whether the system of appeals which we are proposing would provide apt machinery for dealing with such cases. We would not therefore think it wrong in principle, or destructive of the general value of the proposed appeal system, to remove such cases from the scope of that system and leave them

entirely to the Home Secretary's discretion subject to his responsibility to Parliament.
But, having put both sides of the case, it added at paragraph 144:
After discussion with the Home Office we are satisfied that there is no need to exclude a case from the appeal system merely because the decision in question was taken on security grounds. It will, however, probably be necessary to make special arrangements for the disposal of such cases within the framework of the system we propose, so as to ensure that appeals are heard only by members of the Tribunal or adjudicators who have been cleared for access to classified information.
My recollection and understanding of the position is that when we were in Government we accepted what the Committee said in that paragraph and gave a right of appeal under Section 9 of the Immigration Appeals Act, 1969, which says:
Whether a person appeals to an adjudicator against any decision or action and it appears to the Secretary of State that the decision or action was taken in the interests of national security, the Secretary of State may direct that the appeal shall be referred to and heard by the Tribunal instead of by an adjudicator….

Mr. Crowder: Does it allow appellants to be represented?

Mr. Callaghan: That comes afterwards. I am subject to correction, but my belief is that they were allowed to be represented before the tribunal, as, I think, in the Dütschke case where there was a whole legal panoply that in my view went beyond what I had expected under the Section. That is one of the difficulties about that case. The tribunal was nominated by the Lord Chancellor and the Home Secretary of the day.
That was the position until the Home Secretary came to the conclusion that he could not be overborne by such a tribunal without his own position being called into question. I agree with my hon. Friend. I never felt that difficulty myself. I think that if I had put a case to the tribunal and had been overborne I should have been very angry, and should have been sure that it was wrong. But I do not think I should have felt it incumbent upon me to resign because of that. However, there was that feeling, and I am not arguing that matter particularly tonight.
The Home Secretary then took the view that he should exclude security cases from the appeals procedure. The Bill, as it now reads and as is read before it


went to Committee says that a person shall not be entitled to appeal if the Secretary of State certifies that his departure from the United Kingdom would be conducive to the public good.
The Home Secretary—if I am wrong I want him to correct me— has now criticised the words
conducive to the public good".
although they have appeared in previous Acts and I do not feel that I could entirely disregard them, though I am in Opposition now. He has tried to meet us to some extent by defining or enlarging the phrase. But, instead of leaving it at that, in his Amendment No. 46 he has provided that a person shall not be entitled to appeal if the grounds are that he is being removed
… in the interests of national security or of the relations between the United Kingdom and any other country or for other reasons of a political nature.
I do not think that the right hon. Gentleman is quite fair in praying us in aid in relation to this extension. It is true that the words were used in the Aliens (Appeals) Order, 1970. I do not pretend that I remember every word of that Order. I ask the House to bear with me while I read Article 8 to see whether the Home Secretary is not stretching the meaning of this. It is headed
Special procedure in cases involving national security, etc., or forgery of documents 
and it says:
Whether a person appeals against any decision or action to an adjudicator, or by virtue of Article 4(1)(b) of this Order to the Tribunal, and it appears to the Secretary of State that the decision or action was taken wholly or mainly in the interests of national security or of the relations between the United Kingdom and any other country or otherwise on grounds of a political nature, the Secretary of State may direct that appeal—

(a) if it would otherwise be heard by an adjudicator, shall be referred to and heard by the Tribunal as constituted for the purpose of hearing appeals …".
This is a different point. Unless I am mistaken—and I do not think I am—the Aliens (Appeals) Order said, "We do not think that cases of a political nature should be considered by an adjudicator; we consider that they should be extracted from his purview and given to the tribunal"—made up of the Lord Chancellor's nominees and the Home Secretary's nominees. But, with respect,

that is not what the Home Secretary's Amendment No. 46 does.

Mr. Roger White: No. 49.

Mr. Callaghan: No. 49 as well, is it? I am on No. 46 at the moment, which provides, after the reference to "conducive to the public good", that we rule out from appeal altogether cases covered by
the interests of national security or of the relations between the United Kingdom and any other country or for other reasons of a political nature ".
I feel that, in going some way to meet us, the Home Secretary has extended the conclusions to a degree which might well arouse the legitimate disquiet of hon. Members on both sides. Unless I am mistaken—I always give way to the lawyers, because they interpret these things better than I can—have I put it correctly?—

Mr. S. C. Silkin: indicated assent.

Mr. Callaghan: Thank goodness for that. As I understand it, the Home Secretary has, I am sure unwittingly, stretched the meaning and the purpose, so let me repeat my understanding of the point on the Aliens (Appeals) Order—

Mr. Maudling: indicated dissent.

Mr. Callaghan: The right hon. Gentleman shakes his head. I shall state it as correctly as I can, and he can put me right. The Aliens (Appeals) Order gave a right of appeal to people who might be thought to be offensive to public opinion and who were, therefore, removed on political grounds, but it gave it in a limited area by saying that they might go only to the tribunal. As I understand it, the Home Secretary's Amendment would remove them from the ambit not only of the adjudicator but of the tribunal as well.
If I am wrong about that, the Home Secretary will put me right. But I have listened to the debate and I have looked up the background, and I believe that what I have said is correct. In the circumstances, therefore, I feel that we are justified in pressing the Home Secretary on the matter. Clearly, he cannot do anything about it at the moment, but he ought to have another and serious look at the question when the Bill goes to the other place.

Mr. Fletcher-Cooke: From his reading of the Wilson Report, will the right hon. Gentleman say whether I am right in thinking that, after the Committee had been to the Home Office and had that reassuring conversation with officials, its only special recommendation or special form of appeal was for matters of national security, so called? The Wilson Committee did not think that there was any need for a special appeal for matters of a political nature. Therefore, to pray Wilson in aid for no appeal at all for matters of a political nature does not accord with the report.

Mr. Callaghan: The hon. and learned Gentleman reinforces my point far more powerfully than I could have done. I did not bring the point out clearly. If our joint reading and understanding of the matter is correct, Wilson was keeping this in terms of national security, but the Home Secretary is widening it.

Mr. Maudling: It is clear from the debate that there are still two points which concern the House. It is accepted that there is a special category of cases of deportation which must be dealt with in a special manner. The two questions are these: first, "What should be the ambit of that special category and what should fall within it?;" second, "Given the special category, how should it be handled and what should be the appeal machinery?"
On the first point, there is, I think, no difference between the two sides of the House as regards national security and international relations. It is the cases of a political nature which concern the House.
I think that the right hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan) is right in his description of the origin. It originated from the Wilson Report, the phrase used by Wilson, I think, referring to the possibility of matters offensive to public opinion. On the basis of the Wilson Report and the consideration of the previous Government, Article 8 of the Aliens (Appeals) Order was laid before the House in draft, was before the House for a long time in draft, was referred to frequently in discussions on the Bill and was approved by the House. As far as I know, it has not given rise to difficulties. We are following the procedure put forward by

the previous Government which was discussed, noted and accepted by the House and which, as far as I know, is perfectly satisfactory. On the whole, it is a pretty reasonable argument.
It is possible to say that the House and the previous Government were wrong. I do not think they were. As the Wilson Committee said, there are cases of a political character. For example, people may come here to make a speech wholly offensive to a certain section of our public. There should be a right to exclude them. These are special cases of a political character in which the judgment is better made by politicians in the House than by an immigration tribunal.
The second point is: who is to make the decision? It is said that if the Home Secretary decides that a certain person should be deported there should be an appeal. But an appeal to whom? Should it be to a tribunal or to the House of Commons? It cannot be both. If we take the power of decision from the Home Secretary and say that he can be overruled by a tribunal, we take responsibility from the House. This point was always recognised in our constitution until a few years ago—that the Government are responsible for national security to the House of Commons.
Whether an individual's presence in this country is a danger to this country is not a legal decision. It is not a justiciable issue or a matter of law; it is a matter of judgment. Judgment should be exercised by the Government, subject to the House of Commons, and not by a tribunal which is not under the control of the House.

Mr. S. C. Silkin: Surely the right hon. Gentleman recognises the distinction between people who, as he puts it, are a danger to this country and people who are, in the words of the Wilson Report, offensive to public opinion. Why should they be prevented from putting their case before an independent tribunal?

Mr. Maudling: In that case, why did the Labour Party, when in government, treat these people on the same basis as a threat to national security?

Mr. Callaghan: Either there is a misunderstanding or I am deficient in understanding. Article 8 of the Aliens (Appeal)


Order said—and this is where the right hon. Gentleman is misleading the House—that they shall have a right of appeal but that it shall be a special right of appeal to the tribunal and shall be lifted out of the hands of the adjudicator. The Home Secretary is now saying that there shall be no right of appeal and that he as Home Secretary will decide. He is going a little far in praying us in aid to support the fact that he is destroying a right of appeal.

Mr. Maudling: The right hon. Gentleman's memory is a little defective. He provided two sorts of appeal. In one the decision was mandatory on him. In the other it was purely advisory, in which case the final decision rested with him. In defining the special category where he preserved his final right of decision, he included the security cases and other cases of a political nature. In taking the special category of case, we are taking precisely the same category as the right hon. Gentleman took, very wisely and for very good reasons.
I return to the basic point, which is of fundamental importance. If the Government decide that someone's presence in this country is contrary to national security and the interests of international relations or falls within the other categories which the Labour Party, when in government, accepted, if the Home Secretary is wrong he is answerable to Parliament, not to an adjudicator or administrator. These are decisions of a political, executive and administrative character.
In my Amendments I have put forward precisely what the Committee undertook to do—a procedure of advice which has proved wholly satisfactory in the case of our own Crown servants who are said to be people who should not be fully trusted. Individual cases in the Civil Service are tackled by this system. To apply it to the people with whom we are dealing is reasonable and preserves an important constitutional point—the responsibility of the Home Secretary to Parliament and not to an adjudicator.

11.30 p.m.

Mr. Crowder: My right hon. Friend says "If the Government are wrong" or "If the Home Secretary is wrong". They probably will be wrong, from what I know of them. In every case of this

sort, would it not be wise if they listened to legal argument? Why does everything have to be swept aside by bureaucracy in Whitehall? Why on earth can we not have the case properly presented by legal representation, which, after all is skilled representation of a case, however bad it may be—and I know about that because I frequently have to present such a case. It is all part of the set-up of this country.
Why not let the matter be discussed and presented before the Home Secretary—who has very great obligations, although he is not a judge and has no judicial training whatever—jumps into a decision? It would be nice to have the right decision.

Mr. Maudling: My hon. and learned Friend makes his point with the greatest charm, but I do not agree with him. I do not think he has quite understood my point. The decision in these cases is not a legal decision. When it comes to settling legal matters I bow invariably to those who are practising members of the Bar, unlike myself, who am a theoretical member of the Bar. These are not matters for legal decision at all. The question of whether an individual's presence in this country is bad for national security can, I believe, be better decided by a Minister responsible to Parliament than by even the most distinguished lawyer.

Mr. Crowder: I agree that these are not legal matters, but they are humane matters, they are matters affecting the individual, who may not be in a position to put them in the best possible light before the people who make the final decision. I know that it is the right hon. Gentleman who does so, on the advice of those in the Civil Service who assist him in these matters. The presentation of a case need not be on a legal basis; it can, clearly, be put on a humane basis. That is what matters here. As this is humanity with which we are dealing, as it is a matter of immigration, of the future of human beings about which my right hon. Friend will have to take a decision, would there be any harm in someone who is skilled in putting matters in the best possible light—be they legal or humane—being allowed to do so? It would assist the Home Secretary. Good heavens, there are hon. Friends sitting


on these benches, behind me, opposite me, who sit at quarter sessions and the like and it is of the greatest assistance to them when they have to judge a case that it has been put by someone skilled in such matters.

Mr. Clinton Davis: rose—

Mr. Speaker: Order. I cannot have an hon. and learned Member who is making an intervention giving way to another hon. Member during the course of that intervention.

Mr. Crowder: I ask my right hon. Friend: what is harmful in people who are skilled in putting a case in its best possible light assisting him and his Department in this matter? Why deny it?

Hon. Members: Answer.

Mr. Hugh Fraser: Amendment No. 46 defines more clearly
conducive to the public good.
To some of us this extension of what the public good means could be alarming. This is especially so when dealing with relations between the United Kingdom and another country because it goes rather wider than some people anticipated.
I can think of large numbers of people who have come here and whose presence might have been termed as "not conducive to the public good"—Louis Napoleon, Kossuth, Garibaldi, Karl Marx. A large number of people in the Commonwealth could fall within this category. We must remember that fortunes change. Perhaps Dr. Obote, if he were here, would come under such consideration. Therefore, the Secretary of State should look a little more circumspectly at some of the suggestions which have been put forward on this matter.
It is important from the point of view of protecting my right hon. Friend's own interests that there should be some form of sieve to catch these cases before he reaches his final decision, otherwise the House will be the final arbiter. This would put a heavy load on the House which would be full of emotion and which would raise wide political issues with which it would be difficult for the House to deal.
Some provision on the lines of new Clause 5, which is only permissive and

would provide for the Chief Magistrate to make a recommendation with which the Secretary of State need not agree, seems a way by which persons coming into this country could be protected. The standing of this country in international law would be vindicated and the load on the Secretary of State would be ameliorated.
I hope that when the Bill goes to the House of Lords my right hon. Friend will reconsider the matter further. The width of what
conducive to the public good 
means could be dangerous. We are not depending on the permanency of a sound, safe, good, liberal man in office like my right hon. Friend. We are making the laws of this country. This is what this House is about. It is for making laws, not for making statutes which will be interpreted by good men. Therefore, the argument that we now have a good, warm-hearted Home Secretary is no justification for a Clause which, at this stage, is far too vague and requires better definition.

Mr. Callaghan: I should like to raise a point of order, Mr. Speaker, on the selection of Amendments, which of course is entirely a matter for you, but on the other hand I know that you like to meet the convenience of the House. New Clause 5 is not a Clause upon which we could vote at present because, under the selection, it would not be called for a Division, nor is new Clause 2 appropriate for a Division.
I would draw your attention, Sir, to Amendment No. 95 which seeks to strike out the words
or for other reasons of a political nature.
from Government Amendment No. 46.
Would you reconsider your decision and allow us to test the opinion of the House on Amendment No. 95? We should not need, and obviously would not get, a further discussion on it, but this procedure would crystallise the distinction that has emerged, and enable the House to register a view on whether it thinks that cases of a political nature might reasonably go to the appeals tribunals. To facilitate progress if you were able to do that, Mr. Speaker. I would propose that we should not spend further time on new Clause 2, but pass on.

Mr. Speaker: I will certainly consider the point sympathetically. I do not think it would be right for me to give a Ruling on it now, but the selection is always provisional, and I will bear in mind what has been said.

Mr. David Steel: Further to that point of order. Will you also consider, Mr. Speaker, for precisely the same reasons, Amendments Nos. 114 and 115. What the right hon. Member for Cardiff, South-East (Mr. Callaghan) has just said would not cover the objection which the right hon. Member for Stafford and Stone (Mr. Hugh Fraser) has spoken to. The Amendments tabled by my colleagues and me are designed to remove the right of appeal only in cases of national security. A large section of opinion in the House would support that, and I ask you to consider this point.

Mr. Speaker: It is my practice to consider these matters in the morning each day, and I will bear these points in mind.

Mr. Callaghan: I beg to ask leave to withdraw new Clause 2, knowing that the matter will have your full, impartial consideration, Mr. Speaker.

Motion and Clause, by leave, withdrawn.

New Clause 4

RIGHT OF APPEAL AGAINST PROHIBITION ON EMBARKATION

Where any person has been prohibited from embarking upon a ship or aircraft by virtue of the provisions of subsection ( ) of section 3 above and where, any person having been so prohibited, leave has been given to such person to embark at a specified place or time or otherwise subject to conditions, such person may appeal to a Judge in Chambers of the High Court in England or in the High Court of Justiciary in Scotland and any part of the proceedings upon such appeal may, with the leave of the judge, be heard in the absence of the aggrieved person and his representatives, and upon such appeal the judge may make such order subject to such conditions as he may consider just.—[Mr. Peter Archer.]

Brought up, and read the First time.

Mr. Speaker: It would be for the convenience of the House to discuss at the same time Amendment No. 22, in Clause 3, page 4, line 33, leave out subsection (7) and insert:
(7) Where any immigration officer, constable or other person authorised by the Secretary

of State reasonably believes it to be necessary so to do for the purpose of ensuring the safety of any ship or aircraft or the passengers therein or crew thereof he may prohibit any person from embarking thereon and may further prohibit him from embarking upon any other ship or aircraft of any specified class and the Secretary of State may at any time cancel such prohibition or give such person leave to embark either at a specified place and time or otherwise subject to conditions.

Mr. Peter Archer: I beg to move, That the Clause be read a Second time.
Hon. and right hon. Members who have compared the Order Paper with the Bill will not be surprised to learn that this Amendment relates to Clause 3(7). The subsection, for some curious reason which has still not been explained, is concerned with two entirely unrelated matters. First, it contains what in Committee the Under-Secretary called the "tit for tat" principle. More accurately, it should be called the "hostage" principle, and Amendment No. 22 seeks to delete this provision.
The principle contained in the former part of the subsection is that where a foreign power restricts the rights of United Kingdom citizens to leave its territory, the Government may prohibit nationals of that country from leaving the United Kingdom. That is not "tit for tat". It entails that citizens who may be innocent of any offence must be visited with the sins of their Government. It is a distasteful principle, and the peoples of the world may establish that Governments are not entitled to use one another's citizens as pawns in an impersonal, soulless game of chess.
If the Government pay us the compliment of insisting that they are merely imitating us, and have no better answer than that for indulging in the old game of tu quoque, in fairness it is true to say that the principle applies already to aliens and that the previous Government in the special circumstances of 1967 restricted Chinese citizens from leaving this country. The Bill seeks to extend the principle to Commonealth citizens, and this may be a suitable opportunity to consider whether it is a principle that is so distasteful that we do not wish to retain it upon the Statute Book.
Even if we accept the principle, the draftsmanship presents curious aspects. First, it applies only to non-patrials. Of course, there may be citizens of an


offending country who are none the less patrials under the Bill. That is one of the curiosities of the whole scheme of the Bill. They are free to leave as they please.
11.45 p.m.
But non-patrials are unhappy, indeed, because the Government introduced the Bill expressly to prevent them from entering this country as they please or from staying as long as they please. Yet when they are here the Government want power to tell them that they cannot go away. That is a curious principle. The logic of my hon. and learned Friend the Member for Dulwich (Mr. S. C. Silkin) in pointing this out in Committee was not refuted: rather, it fell on deaf ears.
Secondly, the Government seem to seek power to tell non-patrials that they cannot embark elsewhere than at a port of exit. If they are to be held as hostages, what is the magic about a port of exit? My hon. and learned Friend asked for an explanation of this in Committee, but none came. But the Under-Secretary of State undertook, in col. 712, to take advice on the point. No doubt he has now taken that advice, and the House will be interested to hear his conclusions. This is half of the suggestion. In Amendment No. 22, we are simply seeking to delete that half.
Then, in the same subsection, comes a quite unrelated matter, which gives the Government power to prohibit embarkation on a ship or aircraft in the interests of safety. We were told in Committee that that was all to do with hijacking. Quite sensibly, the Government want power to prevent suspected hijackers from embarking, but again it is enshrined in some curious draftsmanship. Again it applies only to non-patrials. So a passenger may embark on a plane with a ticking parcel and with a sub-machine gun protruding from his pocket: if he produces his certificate of patriality he may be welcomed aboard by the company's prettiest hostess.
If the Government object to hijacking, what has patriality to do with it? Again, my hon. and learned Friend sought an explanation of this in Committee, and again the explanation never came. Amendment No. 22 seeks to redraft this part of the Clause. As drafted, it obviously gives a power much wider than

the power to control hijacking. The Under-Secretary undertook to consider this point, and we should be interested to hear what emerged from his consideration.

New Clause 4 seeks to provide that anyone so prohibited may have the right of appeal, and this is the least that we can offer. The Government may very properly prevent him from boarding if they suspect that he is potentially a hijacker. It is right that someone should decide whether he really is, particularly since I understand that hijacking as such is still not a criminal offence, although we may one day bring our criminal law up to date on this.

An appeal in the normal sense does not arise here. It is too late to say that someone should have been permitted to board a plane if the plane has already gone, and we do not complain that the authorities should keep a suspected person on the ground while there is any reasonable doubt about his intentions. The new Clause provides that a judge in those circumstances would be able to make such order as seemed just. That was the most liberal way in which we felt we could draft it. If the Government have any specific objection to that form of words, we are more than prepared to listen to them.

It is right to reiterate that new Clause 4 is concerned only with the latter half of the subsection. It has nothing to do with the hostage provision, nor has it anything to do with the unnecessarily broad powers which the Government are seeking in the subsection. These are matters which the House will have in mind when we reach Amendment No. 22.

New Clause 4 seeks only to provide the elementary safeguard of a right of appeal. If all the consideration which we were promised in Committee has materialised, it may be that it has borne fruit and that the Government will propose some alternative method of dealing with these problems.

Mr. Sharpies: As the hon. and learned Member for Rowley Regis and Tipton (Mr. Peter Archer) has said, we gave some consideration to this matter in Committee, and he will be the first to acknowledge that the restrictions imposed by the Clause are intended to apply in a limited number of cases only. They are intended to apply, first, to a person


who may be seeking to endanger an aircraft or a ship and may need to be prevented from embarking for that reason, and, secondly, in the exceptional case where restrictions might have to be put on a non-patrial leaving this country because of restrictions placed upon British citizens overseas.
The Labour Government had to use these powers in this latter connection. Because representatives of the British Mission in Peking were prevented from leaving China, the previous Administration introduced an order under the Aliens legislation preventing members of the Chinese Mission here from leaving this country. Only in exceptional cases will these powers be used. The Labour Government had to use them in that way, and, in the opinion of the House, they were rightly used in those exceptional circumstances.
It is not possible for anyone to say that a similar situation will not arise in future when the lives of British nationals may be in peril in a foreign country. Therefore, I believe that these powers, which would be removed by acceptance of the Amendment, should be retained.
On the hijacking of aircraft, I admit that there is a lacuna in the Bill, insofar as the power to restrict the departure of a person does not apply to a patrial who is here now. This matter has been carefully considered. I do not believe that it would be right to use the Bill to take powers to restrict citizens of this country from leaving at any time. As my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs told the Committee when we were considering this matter, the Department of Trade and Industry is preparing legislation to give effect to the Convention on the Suppression of Unlawful Seizure of Aircraft, signed at The Hague on 16th December, 1970. This legislation will be introduced as soon as parliamentary time is available. This would cover the lacuna in respect of this group of people.
The other main matter referred to by the hon. and learned Gentleman concerned the question of appeal. He did not suggest an appeal in the case of reciprocal restrictions because he wished the power of restriction to be entirely

removed in such cases. As for the other form of restriction which might be imposed—where an immigration officer imposed a restriction because of a possible danger to the ship or aircraft—there was no question, when the Wilson Committee considered the question of appeal, of an appeals machinery being introduced.
We have carefully considered whether an appeals machinery should be set up in such cases. We have concluded that it would not be necessary. The number of cases involved will be very small indeed. There is no restriction, other than against embarkation, and if a person feels that he has been unlawfully restrained from embarking on a ship or aircraft, he has the normal right of appeal in the courts.

Mr. S. C. Silkin: Is the legislation which the hon. Gentleman said is projected and which is designed to deal with the case of patrials in this context intended to provide a right of appeal?

Mr. Sharpies: The Convention has been signed and the legislation is in the process of drafting. I cannot, therefore, answer that question.
No evidence was put forward by the Wilson Committee to suggest that any form of appeal was necessary to deal with the very limited number of cases that might arise under this provision. I would not advise the House, therefore, to accept the Opposition proposal.

Mr. J. Enoch Powell: The hon. and learned Member for Rowley Regis and Tipton (Mr. Peter Archer) reminded the House that an undertaking was given in Committee to consider the precision of the drafting of that part of Clause 3(7) which is intended to refer to hijacking.
Since there is a further stage through which the Measure must pass, I put it to my hon. Friend that it is not satisfactory that so broad an expression as
in the interests of safety".
should be used when a very narrow set of circumstances is all that is contemplated. I intervene only to ask that this matter be considered from that point of view at a later stage of the Bill.

Mr. S. C. Silkin: The right hon. Member for Wolverhampton, South-West (Mr. Powell) will have noticed that in our proposal we have sought to give effect to the point he made and to take out of the Bill the vagueness which at present is implicit in the expression to which he referred. Instead of simply referring to
in the interests of safety
we have expressed the point in terms which show what it is clearly intended to mean, and we use the expression
ensuring the safety of any ship or aircraft or the passengers therein or crew thereof",
and that is, I think, what the right hon. Gentleman has in mind.
I hope that the Minister will at least tell us before we decide what to do about the Amendment that some such wording as that will be used to make it clear exactly what is intended by the Clause.

Mr. Sharples: I assure my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) that we considered this point carefully at the conclusion of the Committee stage. The restrictions are, of course, to be introduced by Order, and it is considered that it is wise to give the maximum discretion in the drafting of Orders of this kind. I remind the House that Clause 3 later points out that
Any Order in Council under this subjection shall be subject to annulment in pursuance of a resolution of either House of Parliament".
This is not a power taken lightly, but it would be difficult if there were restrictions upon the drafting of the Order.
We have considered very carefully the point raised by my right hon. Friend in Committee and have come to the conclusion that it would be right to stick to the Clause as worded at present.

12 midnight

Mr. Peter Archer: When I introduced the Amendment I paid the hon. Gentleman the compliment of supposing that he would not indulge in the tu quoque game. As I said then, it is true that we used the power in 1967 in relation to Chinese citizens. That was a very unusual situation. It happened at a time when the Chinese Government were not susceptible to normal diplomatic represent-

tations, and it is the kind of situation which is unlikely normally to be repeated. If it is, it is right that so unusual a situation should be considered by the House. We are no more enamoured of this principle as part of our legislation after the hon. Gentleman spoke than we were before.
On hijacking we appreciate the point made by the hon. Gentleman that it is odd to use an immigration Bill to deal with precautions against it. In that case, why use it? Why not leave it to the legislation which is projected? If someone is suspected of being an intending hijacker, what does it matter whether he is pa trial or not? We have still not had an explanation of that point, nor are we satisfied with the explanation of the very curiously worded power which is taken to deal with a point relating specifically to hijacking. As the right hon. Member for Wolverhampton, South-West (Mr. Powell) said, it is a very wide power. Looking at the Bill as originally drafted, none of us realised that it was intended to relate only to hijacking. We were told that for the first time in Committee, and we are still very much less than happy about it.
On the appeal machinery, there is a legal redress for those who are unlawfully prevented from embarking on a ship or aircraft. But that is not what we are dealing with. We are dealing with those who have been lawfully prevented from embarking, because the Bill gives the Government power to prevent them from embarking. It is that power which is in question and for which still no appeal is provided. We are no happier about this than we were at the outset of the discussion. I suspect that there are many unhappy non-patrials who may be rendered more unhappy about it in the course of time. We are not convinced by what the hon. Gentleman said, and we do not propose to withdraw the Amendment.

Question put and negatived.

Mr. Maudling: I beg to move, That further consideration of the Bill, as amended, be adjourned.

Question put and agreed to.

Bill, as amended (in the Standing Committee), to be further considered this day.

GUNNISLAKE (INDUSTRIAL DEVELOPMENT)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Hugh Rossi.]

12.3 a.m.

Mr. Robert Hicks: I am grateful for the opportunity to draw the attention of the House to a most disturbing and depressing feature within the Bodmin parliamentary division, namely the position of Gunnislake. It would be helpful to the House if I first described the background and geographical setting of this unfortunate community.
Gunnislake is situated in the Tamar Valley at a Bridging point of the river on the A390 Tavistock to Callington to Liskeard road. It is linked to Plymouth by a branch railway line, a line which is in receipt of a Government subsidy and whose future is thus not assured. Historically, Gunnislake is dependent upon mining, quarrying, horticulture and Devon-port Dockyard for its economic well-being. Forty men still travel to the dockyard for their employment. Only one quarry employing 62 people remains. Mining has long ceased, although there is talk, plus trial borings, which suggest that a revival could take place, but this is still at a most speculative stage. Horticulture is declining in importance in terms of numbers employed, since these activities comprise mainly family units and provide work only on a seasonal basis for women. This is the background.
Last month, I asked a series of Questions relating to the current unemployment position. On 5th April this year there were 128 people registered at Gunnislake Employment Exchange. This represents over 12 per cent. of the local insured population. This morning, 14th June, that figure stood at 105. This is bad enough, but a closer analysis of these figures shows that of those 56 have been out of work for over six months; about 40 per cent. A closer examination reveals that 26 people over 50 years of age have been unemployed for over a year. Some have been unemployed for much longer than a year, but the statistics kept by the Department of Employment only go up to one year. Anyone out of work for more than a year, irrespective of the length of that unemployment, is

classified as having been unemployed for over a year. Twelve people over 50 have been unemployed for six to 12 months, so it is mainly the elderly who are suffering most in this area. I am informed that since work has been completed on the Plympton bypass an additional three men have been registered as unemployed. That is the depressing position expressed by the cold statistical terms.
I would draw the Minister's attention to the fact that this is nothing new to the inhabitants of Gunnislake. Since World War Two, while the economic fortunes of the nation as a whole and of the West Country in particular have waxed and waned but have, overall, improved considerably, and while national and regional unemployment rates have fluctuated, the position of Gunnislake has remained largely unaltered.
May I take this opportunity to include the evidence of two other witnesses of the Gunnislake scene. A few weeks ago I did an interview on the subject with the Lobby Correspondent of our regional newspaper, the Western Morning News. In introducing listeners to the subject, he said:
In the 25 years that I have been reporting West Country regional affairs, the difficulties of Gunnislake seem always to have been with me.
Recently the manager of the Gunnislake Employment Exchange, a man much respected for his detailed knowledge of the area, said in a telling statement:
The Gunnislake total of unemployed is now rising about the 130 total, a high mark in a district where unemployment of between 12 and 14 per cent. of the insured population is commonplace.
He continued:
I've known some of these individuals since schooldays. Their fathers were on the dole when they were at school. I've issued them with their first National Insurance Cards, seen them get married. Now I am paying them for their children. That's how it goes in 40 years.
I should not be using this occasion to the full advantage if I did not, as the Member for the area concerned, attempt to be positive and make a few constructive proposals.
First, the Gunnislake employment exchange area is at present a sub-district within the larger Plymouth exchange area and thus now has intermediate area status. The number unemployed in April,


1971, for the Plymouth exchange area was 2,882, or 4·5 per cent. I cannot but conclude that, because of this present administrative structure, the realities of the Gunnislake situation are masked. One sees, in other words, the Plymouth figure of 4 per cent., or whatever it may be at any given moment, but one does not immediately recognise that within this area there is a locality known as Gunnislake which has, perhaps, 10 per cent. or 12 per cent. or 14 per cent. unemployed.
Therefore, to any Minister based in London or to the officials of his Department the true distressing position of this village is not realised; otherwise surely a more aggressive attitude would have been adopted many years ago. Hence, I request that urgent consideration be given to the need to create a separate Gunnislake exchange area so that the position can be highlighted and be constantly before the Ministry's officials.
Second, in the formulation of regional policies I have always thought and hoped that a Conservative Government would adopt a more selective approach. Surely this is a classic situation for this viewpoint to be enacted. To the west of the Gunislake sub-district lies the majority of Cornwall, all of which has full development area status. To the east and to the south into Devon, intermediate status has already been given to Plymouth and now has also been given to the Tavistock and Okehampton exchange areas.
I ask the Minister in all sincerity to consider the possibility of singling out Gunnislake with its peculiar and long-established problems and grant it some form of special development area status similar, possibly, to that recently given to parts of Central Scotland. This is what selectivity is all about in the context of regional thinking—not to designate vast areas, but to highlight the real pockets requiring assistance on a highly localised scale.
My third and final point is to recommend that the possibility of siting an advance factory at Gunnislake be considered, possibly designed with the development of traditional pursuits in mind in consultation with the Council for Small Industries in Rural Areas, which has had a successful record in Cornwall of late. I believe that this could have beneficial results as, bearing in mind the

past economic strength of the Tamar Valley, this kind of economic venture might prove to be the most suitable for the area.
In conclusion, I express the hope that the Minister will recognise the seriousness of this grave local problem. It will not be sufficient to extend the hope that with the recovery of the nation's economic fortunes so will those of Gunnislake rise. Unfortunately, recent history over the past 25℃35 years will not support the validity of that argument. I suggest that only by an aggressive policy of selective action will real hope be brought to the unemployed and their families living in Gunnislake to prevent my successor as hon. Member for Bodmin in 40 years' time having to raise the same problem again.

12.15 a.m.

Mr. David Mudd: In congratulating my hon. Friend the Member for Bodmin (Mr. Hicks) on both the subject and quality of his case, I suggest that the name of Gunnislake typifies the West Country situation rather than merely identifying a very attractive geographical location. In the way that Jarrow is now accepted as typifying the unemployment of the past in the North-East, Gunnislake symbolises the industrial impotence and the despair of half-a-dozen small Cornish towns and the people who live in them. They find their pleas and their position constantly obscured by the overall statistics of the area, the sub-region, and ultimately the region in which they are placed. Thus it is that 13 per cent. unemployment at Redruth is telescoped into the far less spectacular 4.5 per cent. regional figure. The urgent need for a cure and the case for compassion therefore appears, because of this system of masking, far less urgent and the level of employment far more tolerable.
What my hon. Friend has said is perfectly right. Development policy on a rigid basis is totally useless. What we must have is the courage and the compassion to create precedents where they could be the realistic alternative and solution to the problems we now endure.
Successive Governments have told the Gunnislakes of this world, "When the nation is entirely sound and prosperous and financially healthy, so will you be." But the remedy and the need for that


remedy is more basic, and our plea is far more eloquent. How can we begin to build a sound and healthy nation unless first we create hope and security for the people of the Gunnislakes of the remote regions?

12.17 a.m.

Mr. Robert Adley: Ulster, Scotland and Wales have their vociferous lobbies, but in the West Country we are fairly tolerant and do not make too much noise. None the less, we are sincere in airing our problems.
I come from a more fortunate part of the West Country, but I want to support my hon. Friends in saying that our long, thin region seems to attract less attention as it tapers westwards. I hope that my hon. Friend the Under-Secretary will have listened carefully to the sincere pleas of my hon. Friends.

12.18 a.m.

The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley): I congratulate my hon. Friend the Member for Bodmin (Mr. Hicks) not only on his persistence in making sure that this subject came before the House but also on the way in which he presented his case for his constituents in Gunnislake.
I do not think that any of my hon. Friends are right to imply that the Government are not acutely aware of the problems, very often in small pockets, that they described in theirs and other regions. We do our very best to deal with the difficult pockets of unemployment such as exist in Gunnislake.
I entirely agree with my hon. Friend the Member for Bodmin that the longstanding history of this unfortunate area has made it perhaps a more difficult case than others, because it must be very difficult and unhopeful to live in a place where there have been high levels of unemployment for a long time, even though the total numbers are not great. So my hon. Friends were absolutely right to raise the question.
The Government, of course, feel the greatest sympathy for those who are affected in the area. But I should like to say a few words about the figures. My hon. Friend used the unemployment percentage for Gunnislake; I think that he said that there was 13 or 14 per cent. unemployment in the town. But in total

that works out in the latest count, in May, at 116 persons, of whom 100 were men, and that is a slight drop on the previous month's figures. So we are talking about a small number of people relatively, though I hasten to add that, of course, the fact that their number is small does not in any way lessen the individual hardship which they suffer.
My hon. Friends made a strong plea that we should not try to mask these figures in the overall figures of the Plymouth travel-to-work area. There were 4,002 unemployed in May in the Plymouth travel-to-work area, which was 4T per cent., and that includes Gunnislake and other peripheral areas outside Plymouth. The reason for taking these travel-to-work areas is not in the least to try to mask the worse pockets of unemployment. It is done for the good reason that people do travel to work back and forth within the area which is designated.
It is impossible to try to solve the problems of an area like this unless one takes the area as a whole. The extent of travel to work is much greater in Gunnislake, I think, than my hon. Friend realises. For instance, my figures are that between 100 and 200 people travel to Plymouth by train from Gunnislake every day to work, and between 200 and 300 travel by road in one form or another. Out of an insured population of 537, that represents an extraordinarily high proportion of the working population travelling in that way.
Whether that is desirable or not is not my point. I am merely pointing out that it is a fairly strong justification for taking the travel-to-work area as a whole for the purpose of trying to cure unemployment and the shortage of job opportunities rather than isolate a little village like Gunnislake and give it special treatment. Inevitably, the problems of the area as a whole are wider than just that. Indeed, in all parts of the country, it will be found that there is a much greater travel pattern than many people would be prepared to acknowledge.
The actual definition of travel-to-work areas is determined by the Department of Employment and is based on information from the Census. From our point of view in the Department of Trade and Industry, it is right that we should look


at the travel-to-work area as a whole, because this is the only way that we can develop an area economically; and it would be wrong to isolate a small area such as this and give it special advantages.
I am all for the selective approach which my hon. Friend stressed. Indeed, if he had a map of Great Britain coloured to show special development areas, development areas, intermediate areas and non-development areas, he would agree, I think, that we have been extremely selective. There are those who argue that we have been too selective. But there are two qualifications to be made: one, that one must not alter the boundaries of areas frequently, for this causes confusion and difficulties for industrialists; the other, that one must not draw one's areas too small.
I can demonstrate the truth of what I have just said by considering my hon. Friend's request that there should be special development area status, or at least development area status, for Gunnislake. In considering the 116 unemployed at the May count, we must remember that on the Tyne and on the Clyde there are vastly greater numbers, over 30,000 on the Clyde, for instance. When my hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) talks about Jarrow, he will, I am sure, be the first to accept that the scale of the problem there is totally different from that in Gunnislake.
The area is an intermediate area. It has all the advantages of intermediate area status, including the building grant of 25 to 35 per cent. and the local authority grant for clearing land of 75 per cent. It needs only one factory, with perhaps about 100 jobs, completely to cure the problem in Gunnislake. If the factory was bigger, it would soon come up against problems of shortage of labour.
Out of the 100 men unemployed, 38 are unskilled or labourers, 16 only are engineers or clerical workers, and 11 are administrative, technical and professional people. Therefore, the number of people who are available to work in a factory is very small. Thirty-four of the unemployed are over 60 and 21 over 55. To bring the full scale of special development area benefits to a problem of this

size, without in any way trying to minimise the difficulties for the individual concerned, is not appropriate. The problems in the industrial regions of the North, Wales and the North-West are of such a different order that, although the incentives designed for those areas are suitable for them, I doubt whether it would be right to apply them to a problem of this size.
My hon. Friend asked about an advance factory. We have not an advance factory in the area. But it would hardly seem appropriate to put one there at this time, particularly bearing in mind what I have just said. But the generous building grant, would always be available if any firm wished to build a factory. The Department is always prepared to assist in any way it can if the problem of an industrialist is to find the accommodation needed to carry out his work. I do not believe that the absence of an advance factory is a deterrent in the area of Gunnislake.
My hon. Friend adjured me not to make anything of the economic argument or to say that if there is an upsurge in the economy there will be better chances for an area like this. I do not intend to do so, except to say that the best chance for Gunnislake lies in there being a greater number of mobile firms seeking locations in the assisted areas. It is notable that there is a shortage of such firms.
Gunnislake could solve its problem with just one new firm—and not a very big firm at that. I advise my hon. Friends not to paint too gloomy a picture of Gunnislake. I believe it has many advantages. With a little effort on its part and by presenting the brightest side of the picture, it could well be successful in attracting the one business it needs. We in the Department have brought and will continue to bring the area to the attention of anybody who is looking for a site to build. I believe that there is no reason why this problem should not be solved.
I am sure that my hon. Friend has done a great service in bringing this matter to the attention of the public tonight and I hope that as a result of this debate he will be lucky in finding somebody interested in going to his area. But we can do a disservice to an area


by painting too gloomy a picture of it. I assure my hon. Friend that the Government have no intention of trying to mask the difficulties. We welcome the debate which has drawn attention to them and we hope that the result of my hon. Friend's efforts tonight will be that sooner

or later the necessary firm will appear which will put the picture right for this unfortunate town.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Twelve o'clock.